2003 PLP (Trib (PTD)

"66A. Powers of Inspecting (Additional Commissioner) to revise (Deputy Commissioner's) Order.‑‑(1) The Inspecting (Additional Commissioner) may call for and examine the record of any proceedings under this Ordinance, and if he considers that any order passed therein by the Deputy Commissioner is erroneous in so far as it is prejudicial to the interests of Revenue, he may, after giving the assessee and opportunity of being heard and after making, or causing to be made, such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment to be made. (1A) The provisions of subsection (1) shall, in like manner, apply, (a) where an appeal has been filed under sections 129, 134 and 137, or (an appeal has been filed) under section 136, against an order passed by the (Deputy Commissioner); and (b) where an appeal referred to in clause (a) has been decided, in respect of any point or issue which was not the subject‑matter of such appeal. (2) No order under subsection (1) shall be made after the expiry of four years from the date of the order sought to be revised." (Emphasis provided)

8. The underlined words are very material. Their proper connotation and understanding will help in proper interpretation of the provision of subsection (2) of section 66A. The provision of sub section (1A) was inserted by Finance Act, 1991. The aim and purpose of this amendment is well‑known and need not be repeated. The Honourable Supreme Court of Pakistan has taken notice of the insertion of sub section (IA) in section 66A by Finance Act, 1991, in the case of Glaxo Laboratories reported as 1992 PTD

932. It was observed:‑‑ "The IAC did not have the power to initiate same action in respect of the order passed by the appellate authority or the Tribunal. However, as observed above such power has now been vested in IAC from the year 1991." In the case of Abdul Sattar v. Commissioner of Income Tax reported as 1995 PTD 882, Mr. Justice Ahmed Saeed Awan held that the provision of section 66A being mandatory in its nature, shall apply even if an appeal has been filed under sections 129, 134 and 137 or a reference has been made under section

136. Further, where an appeal or reference has been decided, the revision of erroneous order of I.T.O. will still be possible in respect of a point or issue which was not the subject‑matter of such appeal. It is thus clear that where the appeal has been decided, the revision of erroneous order of I.T.O. will still be possible in, respect of a point or issue which was not the subject‑matter of such appeal or reference. In the present case, the issue of admissibility/inadmissibility of expenses was not the subject‑matter of appeal, therefore, the revisional power could be exercised under section 66A in respect of that point or issue. According to learned Legal Adviser, the original assessment order merged into the order made under sections 62/132 hence, the limitation provided under section 66A would start from the date of that order. In support of this, the case of Pak River Steamers (supra) was referred to show that "any assessment order" means an operative and final order and not original order. The facts of the referred case are distinguishable. Rather, the ratio laid down in this case, goes against the department. It was a case of rectification of mistake under section 35 of the late Income‑tax Act, 1922. The assessee, Pak River Steamers Company, was a successor company of Rivers Steamers Navigation Company Ltd. having its registered office in U.K. and has its business in the area in the then British India. It was first assessed in Pakistan for the years 1947‑48 and 1948‑49 in the status of "non resident". For the assessment year 1949‑50, assessment was made on 31‑3‑1954 treating the company as "resident". In appeal, the learned AAC accepted the claim of the company as "non‑resident". He also allowed other relief. The I.T.O. revised the assessment in the light of the appellate order on 30‑4‑1959 under section 31 of the Act. In further appeal, the Tribunal further reduced the assessment vide order, dated 15‑5‑1959. Giving appeal effect to the order of Tribunal, the Assessing Officer found that the loss and unabsorbed depreciation allowances determined in the assessment, years 1947‑48 and 1948‑49 had not been properly allocated. After issuing a notice for rectification of the mistake in respect of set off of the losses, the revised assessment, dated 30‑4‑1959 was rectified vide order, dated 15‑7‑1961. Against this order of rectification, a review petition was filed by the company which was rejected by the Commissioner. Thereafter, the assessee‑company challenged the order through writ petition filed in the Dhaka High Court wherein it was observed as under:‑‑ "It may be stated that the order of assessment on the admission of appeal loses its finality and becomes sub judice and subject to the decision of the next higher Appellate Authority provided in the Act and when the case is remanded back to the Income‑tax Officer by the Appellate Authority, the order of assessment passed by the Income Tax Officer to the extent the order of remand is covered becomes non est it loses its existence altogether and the fresh order that is passed after remand will be the only order of assessment." It was further observed:‑ "It is, therefore, to be seen that the original order of assessment for the year 1949‑50 was passed by the Income Tax Officer on 31‑3‑1954 and after the order of remand, the said officer passed the order of assessment on 30‑4‑1959 and the order of rectification after notice and hearing was passed on 15‑4‑1961 and so calculated from the order of revised assessment, the order of rectification is within four years and as such within time. It may be also noted that the question of rectification arose on the making of the revised order of assessment on 30‑4‑1959 as the company was ultimately found to be non‑resident on appeal. " It is, thus, clear that the question of rectification arose on 30‑4‑1959 as the company was ultimately found to be non‑resident on appeal. In view of these facts, the Honourable High Court held that the order sought to be rectified was the order, dated 30‑4‑1959 wherein the question of rectification first arose. In the present case also the order sought to be revised is the order in which the issue of admissibility of expenses first arose. The learned A.R. of the assessee relied upon the decision of this Tribunal reported as 1999 PTD (Trib.) 2294 wherein it was held that where the original order passed by the Assessing Officer was appealed against under section 132 of the Ordinance and the issue raised by the learned IAC in his order under section 66A, was not the subject‑matter of appeal the period of limitation as provided in subsection (2) of section 66A of the Ordinance was to be counted from the date of the original order and not from the revised order.

9. As a result of what has been discussed above, we are of the view, that the limitation starts from the date of the assessment order made under section 62 of the Ordinance and not from the revised order made under sections 62/132, as the issue raised by the learned IAC in his order under section 66A was not the subject‑matter of appeal. As such the order made under section 66A of the Ordinance is barred by time under subsection (2) of section 66A of the Ordinance. Accordingly, we annul the same.

10. As a result, the assessee's appeals for both the years succeed and are allowed. C.M.A./548/Tax(Trib). Appeals allowed.