2003 PLP (Trib (PTD)

6. A probe into and appreciation, of the exact nature of a receipt or an entry in the relevant documents and the record of proceedings has been duly made in all the cases presently under appeal before us as is evident from the detailed rebuttal contained in all the impugned orders under section 66A. The replies of the assessee have been compared with activity charts based upon the personal ledger accounts in the books of accounts maintained by Messrs Moin Sons (Pvt.) Ltd., in respect of each of the appellants. The fact that the IAC went through the books of accounts, extracted the relevant entries, confronted the assessee and examined and commented upon their replies, go to show that the observations of the earlier DB that (a) powers under section 66a had not been exercised in a fair and judicious manner by the IAC and (b) that a fair and reasonable opportunity of being heard was not provided to the assessee, are not attracted to the facts of the present appeals.

7. As for the third observation of the D.B. regarding the words shown or claimed in the law as it then stood, the reply of the assessee, dated 19-2-2000 clearly claims (and shows) that the amount had been obtained as an advance from the company. The concluding paragraph of the explanation submitted by the assessee herself before CWT(A) in the relevant appellate proceedings is significant in its admission that the amount (in question) had been obtained as loan. Also to be noted is the fact that grounds of appeal before us in I.T.As. Nos. 384 and 388/IB of 2000-2001 expressly admit that loans (not advances) had been taken.

8. The ground of appeal in the present appeals as reproduced by the learned Judicial Member, were not formally pressed before us and instead reliance was placed on the decision of the earlier D.B. in another director s case. The first ground assailing the legality of the order appears without force as the IAC is duly empowered to scrutinize the case records and where any proceedings are in her opinion erroneous inasmuch as they are prejudicial to the interests of revenue she can initiate action under section 66A, of the Ordinance. In the present case(s), both the conditions are fully met. The acceptance of the return version under section 59A is itself evident that the DCIT had (erroneously) found the returned version as correct and complete without scrutiny of any evidence and had thereby caused prejudice to the interest of revenue by inflicting substantial loss of revenue. Hence invoking the provision of section 66A is fully in order. Reliance in this regard is plaice on the following reported cases:

In (1980) 41 Taxation 13 Income Tax Appellate Tribunal explained the words as under:- The word erroneous means not in accordance with law and thus any order opposed to any provision of law would be considered as erroneous . The words Prejudicial to the interest of revenue signify an order whereby the Revenue suffers a loss and the assessee pays tax less then what is validly due from him. The Lahore High Court while interpreting section 34A of the then Income-tax Act, 1922 in (1976) 33 Taxation 167 held that,

The revisional jurisdiction vested in him (I.A.C.) is one of super intendence and correction. One of the functions of the I.A.C. is to detect tax-evasions. It was further observed that,

There is nothing in this section to warrant the conclusion that at that stage of the record of ITO he is not permitted to rely on any other material or information not forming part of the record. Any such a narrow interpretation on the opening part pf subsection (1) is bound to unnecessarily curtail the powers of superintendence and control vested with the I.A.C. This power is liable to be rendered almost nugatory and meaningless if indeed his exercise in confined only to correction of errors on the face of record. By all means in the course of the inquiry the I.A.C. can go behind the record if the finds it necessary to do so. The High Court, therefore, held that the order of the Tribunal in seeking to describe the order of the I.A.C. under section 34A as bad in law and without jurisdiction, was not justified. In (1980) I.T.R. page 874 the Income Tax Officer had failed to take notice of facts attracting penalty while he framed the assessment order. The Madhya Pradesh Court confirmed the view of the Commissioner that the ITO s failure to invoke penalty proceedings amounted to an act prejudicial to the interest of revenue. In (1975) 899 ITR page 375, it was held that,

The word erroneous would include the failure to make such an inquiry. The order becomes erroneous because such an enquiry has not been made and not that there was anything wrong with the order even if the facts stated therein are assumed to be correct.

9. The second ground assailing the impugned order to the effect that proper opportunity was not provided to the appellants is equally untenable. The assessee (s) were duly, issued notice incorporating the observations of the IAC and her intention to cancel/modify the order(s) in question. The fact that the assessee(s) had been given the opportunity to respond/rebut her observations, is amply visible not only from the wording of the notice, but also from the fact that the assessees filed written replies thereto. If no evidence was submitted to substantiate their reply, the assessee(s) themselves are to blame for their own fault. In any case, there was no bar in law against furnishing any evidence or personal appearance in response to a notice, under section 66A. In a case reported as 2002 PTD (Trib.) 560 the Karachi Bench of the Tribunal has also found a similar plea as untenable and rejected it.

10. The third ground seeks to differentiate between a 'Loan' and an 'advance for motor car/house building. Irrespective of the established fact that the loan(s) 'advance(s) were not used for the specific purpose(s) for which those were obtained, there is little to differentiate between the two. Indeed, an 'advance' includes a 'loan' and vice versa. The Black's Law Dictionary defines the two as under:‑‑‑ 'Advance. To pay money before it is, due; to furnish money for a specific purpose understood between the parties,' the money or sum equivalent to be returned; furnishing money or goods for others in expectation of reimbursement; money or commodities furnished on credit. A loan or gift or money advanced to be paid conditionally; may be equivalent to 'pay'. 'Loan. A lending. Delivery by one party and an receipt by another party to sum of money upon agreement, express or implied, to repay it with or without interest, Isaacson v. House, 216 Ga. 698, 119 S.E. 2nd 113,

116. Anything furnished for temporary use to a person at his request, on condition that it shall be returned, or its equivalent in kind, with or without compensation for its use. Liberty Nat. Bank & Trust Co. v. Travelers Idem. Co., 58 Misc. 2d 443, 295 N.YS. 2d 983,

986. Bailment without reward, consisting of the delivery of an article by the owner to another person, to be used by the latter gratuitously, and returned either in specie or in kind. A borrowing of or other personal property by a person who promises to return it. "Loan" includes; (1) the creation of debt by the lender's payment of or agreement to pay money to the debtor or to a third party for the account of the debtor; (2) the creation of debt by a credit to an account with the lender upon which the debtor is entitled to draw immediately; (3) the creation of debt pursuant to a lender credit card or similar arrangement; and (4) the fore- bearance of debt arising from a loan. (Emphasis supplied).

11. Concise Law Dictionary by V. R. Manohar, 1997 Edition defines the two terms as under:‑‑‑ "Loan" does not mean an advance in money only an advance may be in money or goods. An act of approach. The word 'advance' conveys the idea of furnishing, tendering or offering something which may be returned in the same form. Money in whole or in part, forming tile consideration of an agreement paid before the same is completely payable: (section 13(d) Indian Partnership Act (9 of 1932); a loan [section 141, ill (b), Indian Contract Act (9 of 1872); to lend; to make payment in participation [section 23(1)(e), Industrial Finance Corporation Act (15 of 1948)]. "Loan" means a loan whether of money or in kind, and includes any transaction which is in the opinion of the Court, in substance, a loan [Act X of 1918 (Usurious Loans Act), section 2(2)].

12. In the case reported as 1986 PTD (Trib.) 828, the terms 'advance' or 'loan', for purposes of section 12(7) have been held to mean:‑‑‑ Advance for loan.‑‑‑'The words 'advance' or 'loan' used in section 12(7) of the Income Tax Ordinance means and implies a loan or advance made in terms of money for specific purposes. It does not include within its fold unpaid sale price of the goods."

13. From the foregoing definitions, it is amply clear that, for purposes of the present appeals, the two terms namely, 'loan' and 'advance' are interchangeable, although ordinarily, an 'advance' covers a larger ground and may include trade advances and other advance payments, in the present situation, there could be no hesitation in holding that the 'advance(s)' in question are in essence and substance, nothing else than 'loan(s)' to which the provisions at the relevant time, of section 12(18) apply fairly and squarely.

14. In view of the foregoing as well as the pleading at the time of hearing as recorded at para. 2 above, the other two grounds of appeal appearing at serial numbers 4 and 5 do not merit much consideration. Ground number 4 alleging that the order was based on 'implied' meanings of the declared version is vague, and was not pressed nor elaborated upon or otherwise substantiated. It is accordingly, disregarded. Ground number 5 talks of the IAC travelling beyond jurisdiction by looking into the utilization of the advances. This is in any case, of an incidental nature and does not detract the mainstay of amounts in question being hit by the provisions of section 12(18). It is also, therefore, disregarded.

15. In I.T.As. Nos. 384/IB of 2000‑01 and I.T.A. No.388/IB of 2000‑01 the following additional ground of appeal has also been taken:‑‑‑ "(vi) That the learned IAC has illegally treated the loan taken through crossed cheque to be deemed income under section 12(18)."

16. From the material examined in these cases, it appears that two of the appellants received the amounts in question through crossed cheques deposited in their respective accounts. The orders under section 66A, however, record the observation of the IAC that this was not substantiated before her. This needs to be examined afresh.

17. In view of the foregoing, the provisions of section 66A by the IAC have been rightfully invoked. However, an apparent discrepancy between the respective amounts of advances taken by the appellants on the one hand and the additions made under section 12(18) on the other, is noticed as under:‑‑‑ Amount of loan taken Addition made under section 12(18) Date of loan 1 Mrs. Ghazala Nasir Rs.200,000 Rs.161.777 19‑11‑1996 2 Mr. Javed Zaheer Rs.250.000 Rs.155,982 19‑11‑1996 3 Mr. Muhammad Khalid Rs.150,000 Rs.146,982 18‑5‑1998 4 Mst. Tallat Yasmin Rs. 750,000 Rs.6,68,650 11‑7‑1995 Rs.250,000 Rs.250.000 11‑7‑1997 5 Mst. Fehmida Hamid Rs.3.500,000 Rs.1,475,003 30‑8‑1995 Rs.1,857,813 6 Mst. Nasreen Tabassum Rs.175,000 Rs.167,270 3‑6‑1995 Rs. 1, 00,000 Rs.825,602 13‑5‑1996

18. Since the additions were made under section 12(18) and not section 13, the quantum of addition for each year needs to be re examined. The cases are accordingly remanded back for de novo orders to be passed in each case keeping in view the amendments affected by the Finance Ordinance, 2000, and for affording further opportunity to the appellants referred to in para. 16 above, to substantiate their claim that in two cases, the loans in question were taken through crossed cheques.

19. The appeals stand disposed of accordingly. (Sd.) (SYED AQEEL ZAFAR UL HASAN), ACCOUNTANT MEMBER. SYED MAQSOOD UL HASSAN SHAH (JUDICIAL MEMBER).‑‑‑

20. In this case as per note recorded by learned Accountant Member vide paras. 1 to 19, a difference of opinion has arisen in respect of applicability of a reported case of a Division Bench of the Tribunal cited as (2001) 84 Tax 124 (Trib). Which was a case of one of the directors of Messrs Moin Sons (Pvt.) Limited as is the case in hand.

21. In these circumstances the following point require resolution on account of difference of opinion in this case:‑‑‑ "Whether the decision in the case reported as 2002 PTD (Trib.) 141 was per incuriam and as such may not be followed for the case in hand for the reasons as recorded by the learned Accountant Member?"

22. Accordingly, the case is submitted to the learned (Chairman for orders in terms of subsection (7) of section 133 'of the Income Tax Ordinance, 1979 for being referred to another learned Member for resolution of difference of opinion ran the above point. (Sd.) (SYED MASOOD UL HASSAN SHAH), JUDICIAL MEMBER. (Sd.) (SYED AQEEL ZAFAR UL HASAN), ACCOUNTANT MEMBER. MUHAMMAD JAHANDAR (JUDICIAL MEMBER).‑‑‑The above titled appeals were heard by Income Tax Appellate Tribunal Bench‑I, Islamabad, learned Judicial Member wrote the order proposed to be delivered. However, learned Accountant Member showed some reservations and differed with the proposed order. The case was submitted to the learned Chairman for being referred to another member for resolution of difference of opinion in terms of subsection (7) of section 133 of the Income Tax Ordinance, 1979. The point which required resolution as deciphered by learned Bench‑1 was as follows:‑‑‑ (Trib.) 141 was per incuriam and as such pray not be followed for the case in hand for the reasons as recorded by the learned Accountant Member."

2. On receipt of the case file, I heard learned DR and AR. Facts of the case have been given by learned Judicial Member which need not he repeated. The convention of learned AR for the assessee remained that a case of a similar‑nature has been decided by this Tribunal disposing of I.T.As. Nos. 1465/IB to 1467/IB of 1999‑2000 for the assessment years 1996‑97 to 1998‑99, since reported as 2002 PTD (Trib.) 141 the instant appeals involving the identical issues be decided accordingly. Learned AR was shown to have not pointed out any distinguishing feature in the reported decision and the cases in hand. It will be worthwhile reproduce some of the observations of the learned Judicial Member which are as follows:‑‑‑ "Apart from above the learned AR of the assessee further in support of his contention with regard to the invoking of powers by the learned IAC under section 66A has referred an order, dated 29‑2‑1996 passed by the Tribunal in I.T.As. Nos.156, 157, 158 and 167/IB of 1993‑94, wherein it was also held that section, 66A of the Ordinance is not meant to make a fresh assessment on issues not examined or settled by the Assessing Officer in the assessment order. The learned AR of the assessee further referred a decision of the Tribunal, dated 29‑9‑20000 passed in I.T.As. Nos. 291 and 292/IB of 1998‑99 and others to contend that the earlier decision of ones Division Bench was binding on the other Division Bench of the Tribunal and he also referred a reported case 1996 PTD (Trib.) 388 which was also cited in the said decision of the Tribunal. In the light of above position and situation as explained by the learned AR of the assessees and the case laws cited supra we may like to state here that the Tribunal has decided the issue involving the instant cases in similar facts and circumstances and in similar situation of, the assessees obtaining loans/advances from the same Private Limited Company in the status of their directors/employees. Moreover, there was no distinction or distinguishing feature in the facts and circumstances of the appeals in hand and the' facts and circumstances of the earlier decided case. Therefore, we have to follow the dictum given by the Tribunal in the earlier reported case. Accordingly, we need not to go into further details of the contentions of the learned AR of the assessees or to discuss the grounds of appeals of every assessee which were almost common in every appeal. We have no hesitation in agreeing with the earlier findings of the Tribunal which were given by the Division Bench of the Tribunal and of course were having a binding effect to this Tribunal to be followed in the similar set of circumstances and fact. Therefore, we accept the appeals of the assessees by holding that the original assessment orders made in the above cases were not erroneous and prejudicial to the interest of the Revenue and that the provisions of section 12(18) were not applicable to the cases of the assessees and the invocation of provisions of section 66A by the learned IAC for exercising the revisional jurisdiction was improper and illegal. Accordingly, the impugned orders in all the above cases are cancelled and consequently the assessment orders originally passed by the Assessing Officer are restored. As a result of above, all the appeals of the assessees shall stand accepted."

3. Learned Accountant Member, however, found that the decision of the Division Bench of this Tribunal reported as 2002 PTD (Trib.) 141 (hereinafter referred to as reported decision) on which proposed order is based is in ultimate analysis per incuriam and cannot be followed. Relevant extracts of the observations of the learned Accountant Member are reproduced below:‑‑‑ "I have read the order proposed to be made by my learned brother, the Judicial Member. With all respect; I find his reliance on an order of a DB of Tribunal in a related case, in arriving at his findings, as erroneous as the said order was clearly passed per incuriam. The grounds of‑appeal in the titled cases, were not argued before us and the only submission made by the AR who was accompanied by Mr. Sardar Alam, a Director of Messrs Moin Sons (Pvt.) Ltd. was that the decision already pronounced in I.T.As. Nos.1465 to 1467/IB of 1999‑2000 on the appeal of another Director namely, Mr. Sarfaraz, Alam, on statedly identical facts, be also applied to the present appeals. That order has since been reported as 2002 PTD (Trib.) 141 hereinafter referred to as the related order as is based upon the ratio enunciated by the Honourable Lahore High Court in their order reported as (2001) 83 Tax 451 (H.C. Lah.) (hereinafter referred to as the High Court's order). The AR also furnished extracts from a case reported as 1966 PTD 854 where C.J. Cornelius of the Supreme Court of Pakistan had, inter alia, dilated upon deviating from an earlier decision of the same Court. It is noted that the same judgment records also that a `Court was not bound to follow a decision of its own if it is satisfied that the decision to follow a decision of its own if it is satisfied that the decision was given per incuriam'. This precisely is the situation with regard to the `related order' which the appellants seek now to invoke. Having examined the `related case' cited as 2002 PTD (Trib.) 141, it transpires that the decision was given: per incuriam inasmuch as it relied upon a decision of the Lahore High Court reported as (2001) 83 Tax 451 (H.C. Lah). That in turn, was based on totally different facts. While the DB was seized with a case where a director/shareholder received an advance in the nature of loan from the company, the High Court dealt with a reverse flow of funds‑namely, an advance (deposit) from the shareholders for an enlarged equity capital. Secondly, the case before the DB was that of classification (into `loan' or `advance') of returnable amount(s) while the High Court was dealing with an altogether different nature of transaction. Thirdly, the case before the DB, involved amount(s) `claimed' or `shown' to be loans advances whereas no such claim was made in the case before the High Court. In fact, their lordships of the Lahore High Court were at pains to point out that the assessee had neither claimed nor shown the amounts in question as a `loan' or ah `advance' and that the department was trying unlawfully to rope in the assessee. As such the High Court order had noting in common with the `related case', which is accordingly rendered per incuriam. The said related order found the IAC to have (a) exercised powers under section 66A in an unfair and injudicious manner, not examined the record objectively to arrive at a definite conclusion that tine original assessment was erroneous and prejudicial to the interest of revenue and not probing the matter so as to judge the exact nature of receipts/entries in the relevant documents; (b) not provided a fair and reasonable opportunity to the assessee of being heard; and (c) failed to appreciate that the provisions of section 12(18) as in force at the relevant time, were not attracted to the case as the two conditions that there was loan received by the assessee and, secondly, it was so `claimed' or `shown' were not simultaneously satisfied."

4. Given this situation the question referred to above requiring answer ranges from what is meant by per incuriam to whether the decision of the Tribunal viz. 2002 PTD (Trib.) 141, the reported decision, may be held to be per incuriam and as such be not followed in the appeals in hand. As a preclude, different sources of law over the years have always engaged the attention of jurists reflecting command of the practices of the multitude having the attribute of antiquity and continuity. Authoritative pronouncements of the superior Courts remained significant in terms of their applicability in the cases yet to be decided by other Courts. Seemingly a well‑augmented mechanism developed to be known with title of share decided with certain qualifications. It crystallized with the passage of time and found place in Constitutions of different countries of the world. We find in Articles 189 and 201 of the Constitution of Pakistan a reflection of this source of law which provide that any rule of law having been enunciated by the Supreme Court or High Court shall be binding on the subordinate Courts. Further pronouncements of superior Courts about the impact of a decision by one Bench over another is a noticeable dimension. It is useful to reproduce here an extract from PLD 1995 SC 423 in re: Multiline Associates v. Ardeshir Cowasjee. "In such circumstances, legal position which emerges is that the second Division Bench of the High Court should not have given finding contrary td the findings of the 1st Division Bench of the same Court on the same point and should have adopted the correct method by making a request for constitution of a larger Bench. If a contrary view had to be taken. In support reference can be made to the cases of the Province of East Pakistan v. Dr. Azizul Islam (PLD 1963 SC 296) and Sindheswar Ganguly v. State of West Bengal (PLD 1958 SC (Ind.) 337), which is a case of Indian Jurisdiction. We, therefore, hold that the earlier judgment of equal Bench in the High Court on the same point is binding upon the second Bench and if a contrary view had to be taken, then request for constitution of a larger Bench should have been made." Income Tax Appellate Tribunal did not lag behind in following this rule and in case 1997 PTD (Trib.) 879 it was laid down as under:‑‑ "The above discussion leaves no scintilla of doubt that in view of the law as laid down by the superior Courts the decision of a Division Bench is binding on the other Division Benches of the same judicial institution. As already held by the Honourable High Court and Honourable Supreme Court it is absolutely necessary to observe this principle in order to avoid the conflicting decisions by the Benches of equal strength which is bound to create complications, confusion and chaos which will result in uncertainty and would be ultimately disastrous to the administration of justice. Consequent to the above conclusion we are of the considered opinion that mistake of law has taken place whereby the earlier decision of Division Bench of the Tribunal has been ignored and a different view has been taken by the learned Accountant Member sitting in the Division Bench and the sleazed third Member to whom the difference of opinion was referred it appears that the learned third Member was not assessed properly on this aspect of the legal decision and consequently a different view was taken whereby the earlier view that by the Division Bench was dissented and contrary view was taken instead of making reference to the Chairman for constitution of larger Bench."

5. In this background it is advantageous to see what is precisely in a precedent that constitutes the rule of the law to be followed by the subordinate Courts or for that matter other benches: Needless to dilate upon this issue in detail. Suffice it may to say that there are two constituents of a precedent namely ratio decidendi and obiterdicta and indisputably ratio decidendi is an underlying principle of a precedent having an authoritative feature which is binding on the parties to it but has the force of law and is operative in rem. Since the question to be addressed in the wake of difference of opinion relates to the determination of whether or not the reported decision 2002 PTD (Trib.) 141 is per incuriam and may not be followed, it is necessary to know the identification of ratio decidendi. In this regard, jurists have laid down different tests and it may not be out of place to mention here one Professor Wambaugh, "who opined that the ratio can be discovered by reversing the proposition of law forwarded by Court and inquiring whether the decision would remain the same notwithstanding the reversal. If remains the same then that proposition of law cannot be considered as the ratio of the case.

6. Further the binding effect of precedent is subject to certain exceptions. One of those being when the precedent is found to be per incuriam. It is pertinent to mention here the observations of Lord Evershed M.R. that as a general rule the cases in which decision should be held to have been given per incuriam are those decisions delivered in ignorance or forgetfulness of some inconsistent statutory provisions or of some authority binding on the Court. In different law dictionaries we find the word per incuriam defined as follows: (1) Jowwitt's Dictionary of English Law‑‑‑Second Edition‑‑‑Per incuriam is a decision given through want of care or a decision which is the result of oversight. (2) Bourier's Law Dictionary‑‑‑Decision given through inadvertence. (3) Bellentine's Law Dictionary‑‑‑Third Edition‑Order passed through lack of care. (4) Law Dictionary by Max Radin‑‑‑Decision given through inadvertence. (5) Black's Law Dictionary‑‑‑"per incuriam (per in‑kyoor‑ee‑am), adj. (Of a judicial. decision) wrongly decided, usu, because the Judge or Judges were ill‑informed about the applicable law. "As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the Court concerned, so that in such cases some features of the decision or some step in the reasoning on which it is based is found on that account to be demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can properly be held to have been decided per incuriam must in our judgment, consistently with the stare decisis rule which is an essential part of our law, be of the rarest occurrence." Rupert Cross & J. W. Harris, Precedent in English Law 149 (4th Ed. 1991).

6. Words and Phrases First Edition by D. Varagarajan per incuriam‑ "A decision would be treated as given per incuraim when it is given in ignorance the term of statute, or a rule having the force of law. An order passed without reference to the relevant provisions of the Act and without any citation of authority is per incuraim (see Municipal Corporation of Delhi v. Gurnam Kaur AIR 1989 SC

38. In the case of Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer (1990) 77 FJR 17; (1990) 3 SCC 682, The Supreme Court explained the principle of per incuriam and held that the Latin expression per incuriam means through inadvertence. A decision can be said to be given per incuraim when a High Court has acted in ignorance of the decision of the Supreme Court." In re: Province of the Punjab v. Dr. S. Muhammad Zafar Bukhari PLD 1997 SC 351, the respondent as Assistant Professor in a Medical College being aggrieved of an amendment in the Punjab Health Department Service Rules, 1979 filed a writ petition in the Lahore High Court Lahore. The appellant Government 'contested the petition on the ground that the question raised primarily pertains terms and condition of service of a civil servant and as such jurisdiction of the High Court stands ousted. After hearing the parties the High Court passed the following order:‑‑‑ "In the light of the foregoing conclusion the writ petitions are particularly allowed and it is declared that the petitioners are eligible to be considered for promotion as Professor." The Government challenged this order before the Supreme Court and it was held that the matters in question pre‑imminently fall within the exclusive jurisdiction of the Services Tribunal and the High Court had wrongly assumed the jurisdiction in the present case. It was observed that the Supreme Court had laid down such a rule in a number of judgments and one of those were N.‑W.F.P. and another v. Sheikh Muzafar Iqbal, and Muhammad Anees v. Abdul Haseeb PLD 1994 SC

539. It was observed that the judgment of the Supreme Court in the case of Dr. Sheikh Muzafar Iqbal appears not to have been brought to the notice of the learned Judge of the High Court and thus the declaration made and the direction issued could not have been made. The Supreme Court declared the order passed by the Lahore High Court to be per incuriam. The S.C. approvingly referred to Halsburys Laws of England 4th Edition Volume 26 paras. 577 and 578 on the question of per incuriam as under:‑‑ "A decision is given per incuraim when Court has acted in ignorance of a previous decision of its owner of a Court of co ordinate jurisdiction which covered the case before it in which case it must decide which case to follow or when it has acted in ignorance of a House of Lords' decision, in which case it must follow the decision; or when the decision is given in ignorance of the term of a statute or rule having statutory force. A decision should not be treated as given per incuriam, however, simply because of a deficiency of parties, or because the Court had not the benefit of the best argument and, as a general rule, the only cases in which decisions should be held to be given per incuriam are those given in ignorance of some inconsistent statute or binding authority." What emerges from the above in relation to per incuriam is that any judgment which is against a statute or a precedent or given as a result of lack of care or through inadvertence shall be said to be per incuriam.

7. Given this background, it is now to be seen what is the basis of holding the reported decision 2002 PTD (Trib.) 141 as per incuriam by learned Accountant Member. The reasons given by learned Accountant Member may concisely be said to be that the facts of the case decided by High Court reported as 2001 PTD 1180 and the reported decision 2002 PTD (Trib.) 141 were different, inasmuch as firstly the Bench announcing reported decision was seized with a case where a director received an advance in the nature of loan from the company whereas the High Court death with a reverse flow of funds secondly the case before the Bench was that of classification (into `loan' or 'advance') of returnable amount(s) while the High Court was dealing with an altogether different nature of transaction and thirdly, the case before the Bench, involved amount(s) 'claimed' or 'shown' to be loan(s) advance(s) whereas no such claim was made in the case before the High Court.

8. From the above it appears that nothing of the sort, as has been found to be instrumental by different authorities in relation to holding some judgments to be per incuriam, has been pointed out by the learned Accountant Member. Neither the reported decision is shown to be violative of any statute or any precedent nor a result of want of care or given through inadvertence. Before proceeding further, let us examine the facts of the case decided by the High Court and the reported decision and determine the ratios thereof. In the case titled Micropak (Pvt.) Ltd. Lahore v. CIT decided by Lahore High Court Lahore reported as 2002 PTD 1180 four appeals were disposed of. The common feature of all the appeals was that the assessee therein being a private Ltd. company received certain amount as share deposit money, which was in excess of authorized capital, having already been fully subscribed, was taken a loan under the garb of share deposit money by learned IAC in exercise of powers under section 66A and as such treated to be deemed income of the company and pas assessed accordingly under section 12(18) of the Ordinance, 1979. It was the case of the assessed that section 12(18) could not be attracted as these sums were neither claimed nor shown to be loan. The High Court held that share deposit money could not be treated as loan. The provisions of section 12(18) (ibid) are not applicable unless two conditions are answered. First that there was a loan received by an assessee and second that it was so claimed or shown by him. Where any two of the requirements were not met, the said provisions I could not be involved. The ratio decidendi, as pointed out above, being the underlying principle of the precedent and has the binding effect in rem as such was thus evidently the demonstration of an amount being loan which attracts the provision of section 12(18). The ratio of this decision has been followed by this Tribunal in reported decision 2002 PTD (Trib.) 141 while disposing of I.T.As. Nos.1465 to 1467/IB of 1999‑2000 assessment years 1996‑97 to 1998‑99, decided on 29‑5‑2001. Now the facts of the case of the reported decision may also be narrated. The assessee, an individual, for the assessment years under appeal was found to have obtained loans of different amounts from Messrs Moin Sons (Pvt.) Ltd., during the periods relevant to the assessment years under appeal IAC was of view that these loans attracted the provisions of section 12(18) of the Ordinance. Accordingly, a show‑cause notice was issued to the assessee calling upon him to explain his point of view in this regard. The assessee explained that the amounts obtained from Messrs Moin Sons (Pvt.) Ltd. were not loans but "House Building Advance" since the assessee, being a director and employee of that company, was entitled to obtain such permissible advance. It was pleaded that the provisions of section 12(18) were not attracted to the case as the receipts in the nature of advances related to the period prior to the new section 12(18) brought w.e.f. 1st July, 1998. However, the learned IAC was not convinced with the explanation submitted by the assessee. She, therefore, modified the assessment orders made under section 59A by adding the amounts of the alleged cash loans as deemed income under, section 12(18) of the Ordinance. The main argument advanced by the learned AR was that the assessee had never claimed or shown any amount or sum of money as loan and the record of the proceedings also did not show the same. It was held by the bench that the learned IAC could always probe into the matter and judge the exact nature of receipt or entry in any of the document, relating to the record of the proceedings under the Ordinance but it was not done so. Further the assessee was entitled to a fair and reasonable opportunity of being heard which was not provided to him. The Tribunal further observed that section 12(18) (ibid) was not applicable because it was not shown that the two conditions had simultaneously been satisfied firstly that there was a loan received by the assessee and secondly that it was claimed or shown by him. The Tribunal referred to the decision of the Lahore High Court reported as 2002 PTD 1180 and found that it applies to the instant case. It was concluded that the original assessment order was not erroneous and pre judicial to the interest of revenue. The provisions of section 12(18) of the Ordinance was thus not applicable. A resume of the orders show that facts of the case decided by the High Court reported as 2002 PTD 1180 and that of the reported decision are identical. The fact pattern is similar. This view is further substantiated by a recent decision of the Tribunal reported as (2002) 86 Tax (Trib.) in which the reported decision was approvingly followed being in line with the decision laid down in the High Court judgment 2002 PTD (Trib.)

141. In these circumstances. I am afraid to subscribe to the view of learned Accountant Member who had purportedly picked up certain distinguishing features to conclude that the reported decision is per incuriam. Be that as it may, even if for sake of arguments it is assumed that the facts were different, learned Accountant Member could at best hold that the facts of the decision of the High Court were distinguishable and the ratio of the said case could not be followed. Resultantly by no stretch of imagination, the reported decision could be held per incuriam and with all due deference, the findings of the learned Accountant Member are not worth concurrence. As a result of the above discussion. I agree with learned Judicial Member in relation to his findings that all the appeals of the assessee stand accepted. C.M.A./577/Tax (Trib.) Appeal accepted.