2002 PLP (Trib (PTD)

1982 PTD 282; 1993 PTD 1328 and 1993 PTD 1395. Learned A.R. also cited the decision of the Tribunal reported as 1992 PTD (Trio.) 1582 whereby the error in jurisdiction and error of jurisdiction was distinguished by the Tribunal. It is the contention of the learned A.R. that in the original grounds of appeals at Sr. No.4, the assessee has raised the issue regarding the objection to the proceedings and object for the proceedings which according to the learned A.R. amounted to the challenging of the jurisdiction.

6. Learned D.R. in his arguments raised the objection with regard to the submission of additional grounds by the ‑learned A.R. of the assessee. According to the learned A.R. the additional grounds have not been raised in the proper manner. Learned D.R. also objected to the admission of the additional grounds with the contention that the additional grounds cannot be raised at any time. Learned D.R. referred to the following observations given by the Tribunal in para. 10 of its decision, dated 23‑1‑2001 in W.T.As. Nos.134/KB and 138/KB of 1994‑95 reported as 2001 PTD (Trib.) 1790: "The Courts of law are very liberal to allow any party at any stage of the proceedings to amend his pleadings in such manner and on such terms as may just and necessary for the purpose of determining the real questions under controversy between the parties. The real object of law is that if amendment is necessary for the purpose of determining the real matter in controversy it should be allowed but as a general rule, amendment will not be allowed in cases: (i) where its effect would be to complete the character of the appeal and fundamental character should not be altered; (ii) where cause of action ought not be allowed to be substituted; (iii) where it will work in justice to any party; and (iv) if by the time, the amendment is sought, it has become barred."

7. It is the contention of the learned D.R. that the issue raised through the additional grounds was not agitated at any stage before the Assessing Officer or the First Appellate Authority. Learned D.R. further submitted that the issue does not arise out of the impugned order nor it was agitated before the Assessing Officer. It is the contention of the learned D.R. that the assessee by submitting the reply, dated 22‑6‑1998 to the Assessing Officer in which he contended that there was still (?) for limitation under section 66 has rather conceded the (???) of the Assessing Officer. Learned D.R. further submitted that when a person by declaration, impression or conduct expresses his intention a thing to be true, he could not deny the same. In this context, learned D.R. referred to Article 114 of Qanun‑e‑Shahadat which according to the learned D.R. was applicable to the income‑tax proceedings also. Learned D.R. stated that no question of law was raised before the High Court nor such question was decided by the High Court. It is the contention of the learned D.R. that the jurisdiction of the High Court was advisory in nature as held in the case of Iram Ghee Mills Ltd. Learned D.R. further contended that since no question of law was decided by the High Court, there was no need of passing any order by the Tribunal under section 136(5) of the Ordinance. Learned D.R. also referring to the decision of the Sindh High Court reported as 2000 PTD 306 and contended that where the case was set aside by the Tribunal, no appeal lies before the High Court. However, learned D.R. admitted that the order passed by the High Court in the instant case was not challenged either through any Intra‑Court Appeal or before the Supreme Court. Learned D.R. who was present with assessment record has also admitted that no order under section 136(5) of the Ordinance was passed by the Tribunal.

8. Learned A.R. in his rejoinder to the above arguments of the learned D.R. stated that the objection of the learned D.R. with regard to the submission of the additional grounds was not correct. According to the learned A.R. the additional grounds have been submitted in the prescribed manner seeking permission of the 'Court for submission and adjudication of the issues raised therein. Learned A.R. further state that the contention of the learned D.R. with regard to the jurisdiction of the High Court was not correct. Learned A.R. stated that the issues raised in the appeal before the High Court related to the jurisdiction regarding the proceedings initiated under section 65 of the Ordinance which were upheld by the I.T.A.T. Learned A.R. further submitted that the facts of the case cited by the learned D.R. reported as 2000 PTD 306 were different from those of the instant case. Learned A.R. stated that in the instant case the High Court decided the appeal filed against the order of the High Court which order was not challenged by the Department in Intra‑Court Appeal or before the Supreme Court of Pakistan. It is the contention of the learned A.R. that the decision of the Lahore High Court in the case of Iran Ghee Mills Ltd. was rather in favour of the assessee. Learned A.R. further contended that under the then provisions of subsection (5) of section 136 of the Ordinance, applicable for the relevant period the final disposal of appeals even after the decision of the appeal by .the High Court was to be made by the Tribunal. With regard to the contention of the learned D.R. regarding the acceptance of the jurisdiction by compliance through reply, dated 22‑6‑1998 by the assessee, learned A.R. contended that he only narrated‑the facts and the reply must be taken in whole context. Learned A.R. further submitted that the assessee has also submitted replies on 29‑6‑1999 and 13‑3‑2000 in compliance with the notices issued by the Assessing Officer. Learned A.R. submitted that legal objections were also raised in the above mentioned replies submitted by the assessee. Learned A.R. further submitted that mixed questions of law and facts could also be raised before the High Court. Learned A.R. further submitted that the jurisdiction of the High Court in appeal provided through the then prevailing provisions of section 136 of the Ordinance were advisory in nature. Learned A.R. contended that the findings of the Lahore High Court in the case of Iram Ghee Mills Ltd. which go to the favour of the assessee also supported this view‑point. Learned A.R. contended that legal ground can be raised at any stage even if no agitated before the lower forums in view of the case‑law quoted above. Learned A.R. further stated that no other ground will be pressed if the legal issues of jurisdiction raised through the additional grounds are adjudicated by the Tribunal.

9. Arguments of learned Representatives of both the parties have been heard. Relevant documents as well as case‑law submitted by both the parties have also been perused. The additional grounds through which the issue relating to the jurisdiction of the Assessing Officer regarding framing of assessment is raised being purely of legal nature are admitted for adjudication. It is a settled principle of law that an issue i purely of legal nature where no further enquiry or investigation of facts is required can be raised at the appellate stage even through not agitated before the lower forums. Even the decision cited by the learned D.R. reported as 2001 PTD (Trib.) 1790, the Lahore High Court has not. ruled out the admissibility of the additional grounds and it has only laid down the conditions where the additional grounds are not to. be admitted. In the instant case, the fact that no final order disposing the appeal was passed by the Tribunal under section 136(5) of the Ordinance is not disputed and the only issue before the Tribunal is that whether the Assessing Officer can proceed to frame the assessment on the basis of the decision the High Court in the absence of an order passed by the Tribunal under section 136(5) of the Ordinance. The provisions of subsection (5) of section 136 of the Ordinance are reproduced below: "(5) The High Court upon the hearing of any such case, shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment under the seal of the Court and the signature of the Registrar to the Appellate Tribunal, which shall pass such orders as are necessary to dispose of the case conformably to such judgment."

10. The above subsection (5) of section 136 clearly provided that the Tribunal shall pass such orders as are necessary to dispose of the case conformably to such judgments. In the instant case, the judgment of the High Court has been sent to the Tribunal but the case has not been finally disposed of by the Tribunal under section 136(5) of the Ordinance which means that the matter is still pending before the Tribunal. In our opinion, when the matter is pending before the higher appellate forum. no proceedings can be initiated by the Assessing Officer. The Assessing Officer should have waited that the cases are finally disposed of by the Tribunal under section 136(5) of the Ordinance. Under the circumstances of the case, the assessments framed by the Assessing Officer are vacated holding the same as ab initio void.

11. Consequently, the titled appeals of the assessee succeed for all the years under consideration in the manner mentioned above. (Sd.) . (Khalid Waheed Ahmed), Judicial Member. (Sd.) (Mrs. Safia Chaudhary) Accountant Member.

12. I beg to differ from the proposed order of my learned brother, the Honourable Judicial Member to vacate re‑assessments under section 62 of the Income Tax Ordinance,' 1979 (hereinafter referred to as the Ordinance) for the assessment years 1983‑84, 1984‑85, 1986‑87 and 1987‑88 as having been illegally made in the absence of any order passed under section 136(6) of the Ordinance. The additional ground on the basis of which this judgment was proposed in my humble opinion conceded by the assessee‑appellant through his consistent conduct during the reassessment the appeal proceedings. A brief recapitulation of the relevant facts of the case will bear out this point.

13. The assessee, an individual; derives income from business and profession. Assessments for the assessment years 1983‑84, 1984‑85, 1986‑87 and 1987‑88 were originally framed under section 59(1) of the Ordinance. Later these were reopened under section 65 as the assessee was found to be owner of certain bank deposits sources of which could not be explained by him satisfactorily. The assessee plea in this regard was that the deposits in various banks belonged to persons who participated in "Boli Wala" Committee which was run by the assessee and he received commission from these persons. Whewtalled upon to lodge documentary evidence in this regard it was submitted that no documentary evidence was available with him.

14. The reassessment orders were set aside by the First Appellate Authority to be made de novo while the action to reopen the assessment under section 65 was upheld. The assessee's objection against jurisdiction assumed under section 65 of the Ordinance ‑was that notice under section 65 was not served on the assessee validly which objection was turned down by the learned CIT(A). On second appeal the Tribunal vide order, dated 14‑12‑1991 upheld the orders of the learned CIT(A) i.e. to say assumption of jurisdiction under section 65 was confirmed but the, assessments were remanded to be made afresh. A miscellaneous application was moved which too was rejected by the. ITAT holding that factum of concealment of income was established.

15. The assessee filed appeals before the Honourable Lahore High court referring the following seven questions for favour of decision: (1) Whether on the facts and in the circumstances of the case the Tribunal was right in adjudicating and ruling upon the remaining issues without deciding the vital issue of assumption of jurisdiction and improper service of notice in terms of section 65(1) of the Ordinance" (2) Whether on the facts and in the circumstances of the case the Tribunal after admitting that Assessing Officer has not been able to appreciate the facts in true perspective was justified to hold that the circumstances of the case warrants de novo assessment? (3) Whether on the facts and in the circumstances of the case, the Tribunal without appreciating the points urged before it was justified in remanding the case to the Assessing Officer and giving a lever in the hands of the Assessing Officer to rectify its errors in law and facts? (4) Whether on the facts and in the circumstances of the case the Tribunal was justified in passing a non‑speaking order, without dilating upon the issues raised and recording the basis of its conclusions? (5) Whether on the facts and in the circumstances of the case the Tribunal was right in summarily rejecting the contentions raised and without giving fair and just consideration to the same? (6) Whether on the facts and in the circumstances of the case and categorical admission by the departmental representative regarding non‑availability of the record, the Tribunal was justified in passing an order based on presumptions, suspicion and whims and without consultation of the record? (7) Whether on the facts and in the circumstances of the case the self‑contradictory and ambiguous order of the Tribunal can be termed as judicious order and can remain in field as a judicious order?

16. A perusal of the above questions reveal that these are basically questions of fact. Briefly speaking the assessee referred two main questions of facts to the Honourable High Court. Firstly, legality of assumption of jurisdiction under section 65 in the absence of a validity served notice under section 65 was justified and secondly legality of assumption of jurisdiction under section 65 in the absence of any definite information with the Assessing Officer was correct. The Tribunal's order was termed as an unspeaking order The Honourable Lahore High Court vide judgment, dated 8‑9‑1997 in I.T.As. Nos. 7 to 11 of 1999 gave the following judgment. "This appeal is directed against the order of the Tribunal, whereby the assessment was set aside and the case was remanded for fresh decision. Learned counsel contends that question of assumption of jurisdiction and various grounds, which raised were not considered by the Tribunal. In this view of the matter, the Assessing Officer is directed to bear the objections which are being urged before this Court. The Assessing Officer is particularly directed to consider the question of jurisdiction, Disposed of."

17. Meanwhile the Assessing Officer took up the reassessment proceedings as these were going to be hit by limitation. He issued notice under sections 61 and 13(1)(aa) of the Ordinance for compliance on 29‑6‑1999. The learned AR for the assessee Mr. Shahbaz Butt, Advocate vide his Office Letter No.BE/N‑59/11251, dated 29‑6‑1999 (copy available on record) submitted to the Assessing Officer that under instruction of Lahore High Court the question of jurisdiction under section 65 in the impugned assessments is first of all to be settled by him. Copy of the order of the Lahore High Court was provided by the Legal Adviser of the appellant to the Assessing Officer. The order sheet of reassessment proceedings (copy available on record) for the years under consideration bears out his facts. The Assessing Officer held that jurisdiction under section 65 was rightly assumed because notice under section 65 was served on the assessee himself as is amply clear from the signatures available on the office copy of the said notice and these signatures tallied with the signature affixed by the assessee on the order sheet for assessment proceedings when he attended office in person. The Assessing Officer, therefore, proceeded to add to the income of the assessee peak deposits in various bank accounts under sermon 13(1)(aa) and reassessments were made at an income of Rs.493,041, Rs.6,755,352, Rs.149,829 and Rs.163,870 respectively for the assessments years 1983‑84, 1984‑85, 1986‑87 and 1987‑88.. On first appeal the reassessment were upheld.

18. On second appeal on the basis of additional ground that reassessments framed in the absence of any order having been passed under section 136(6) by the ITAT are illegal, the assessments are proposed by my learned brother to be vacated. I beg to differ in this regard for the regard for the reasons given hereunder: (1) This ground was never taken before the Assessing Officer during the reassessment proceedings despite the fact that copy of the order of the :Lahore High Court was provided by the assessee's AR himself to the Assessing Officer. (2) That this ground was never taken at the first appeal stage. (3) That this ground was not taken even in the second appeal or during the pendency of the second, appeal. It was taken when he heard of the second appeal was almost concluded by this Bench when the learned AR approached the Bench with the request to take the legal ground as it goes to the very root of the assessments impugned.

19. It has been held by the ITAT in a recent decision reported as (2001) 83 Tax 211 (Trib.) that additional grounds are to be allowed judiciously. The relevant para. of that judgment is given hereunder: "The Courts of law are very liberal to allow any party at any stage of the proceedings to amend his pleading in such manner and on such terms as may be just and necessary for the purpose of determining the real questions under controversy between the parties. The real object of the law is that if amendment is necessary for the purpose of determining the real matter in controversy it should be allowed but as a general rule, amendment will not be allowed in cases‑‑‑ (i) where its effect would be to complete the character; of the appeal and fundamental character should not be altered; (ii) where cause of action ought not to be allowed to be substituted; (iii) where it will work in justice to any party; and (iv) if by the time, the amendment is sought, it has become time barred."

20. As the assessee has made inordinate delay in taking up this ground it amounts to shifting of stance. The entire edifice of the impugned assessments was raised, after giving the assessee an adequate opportunity of being heard and he was fully aware of the fact that no order under section 136(6) has been framed by the Assessing Officer but he raised no objection to the reassessment proceedings in this regard and now after taking a U turn he wants this edifice to be razed to the grounds which is against the basic principles of justice.

21. Even on merit the questions referred to by the appellant to the Lahore High Court were basically questions of fact whether the service of notice under section 65 in this case is valid or not is a question of fact. Similarly whether the Assessing Officer possessed definite information before proceeding under section 65 is basically question of fact‑cum‑law and whether the order of the Tribunal is speaking or non speaking order is purely a question of fact. The Honourable Lahore High Court did not answer these questions in the affirmative or negative for the interpretation and application of which to the facts of this case an order under section 136(6) was required. In fact the order of the Lahore High Court which 'consists of only one paragraph gave clear directions to the Assessing Officer to determine the question of jurisdiction and the' other grounds of appeal in this case and these instructions have been complied with . by him. The impugned reassessment as such in my humble opinion did not suffer from any illegality. The vacation of the same is not justified especially as time for reframing them has run out. The case may be 'referred to the Third Member. (Sd.) (Mrs. Safia Chaudhry), Accountant Member As the difference of opinion has arisen between the learned Members the case is referred to the. learned Chairman to resolve the controversy on the point of vacation of assessments accepting additional ground. (Sd.) (Sd.) (Khalid Waheed Ahmad), (Mrs. Safia Chaudhry) Judicial Member. Accountant Member MUHAMMAD TAUQIR AFZAL MALIK (JUDICIAL MEMBER).‑‑‑This difference of opinion has been referred to me by the honourable Chairman to resolve controversy on the point "vacation of assessments accepting additional ground". I have gone through the judgments of both of my colleagues, Mr. Khalid Waheed, learned Judicial) Member and Mrs. Safia Chaudhry, learned Accountant Member, I respectfully agree with the learned Judicial Member in view of his order in paras. 9 and 10 and am further fortified in my view by the finding of honourable Lahore High Court, Lahore in the case of Iram Ghee Mills (Pvt.) Ltd. (D.B.) in which it has been very clearly dilated upon by the High Court in para. 12 of the order, which is reproduced below: "From the aforesaid juxta positional study of the old and new provisions, we are quite clear to hold that amended section has not altered fundamentals of jurisdiction of this Court. The statutory mechanism of moving the Income Tax Tribunal in the first instance, had been totally eliminated and the Assessee/Tax payer/Commissioner had been blessed With a right to claim answers on question of law from this Court straightway. On this view of the matter; it is thus clear that the change brought in the nomenclature of this provision is cosmetic in nature and is designed to obligerate procedural pre‑conditionalities. Mani festly, neither the nature of jurisdiction of this Court nor its ambit has been changed. This amendment has been made in deference to observation of. Supreme Court made in Pakistan v. Majistic Cinema (PLD 1965 SC 379). On this analysis of old and new provision, we have thus reached the conclusion that the expression `appeal' employed in the new provisions is simply cosmetic in nature and powers of this Court under the old section. In consequence thereof, the assessments framed by the Assessing Officer are vacated and the title appeals of the assessee succeed for all the years under consideration. C.M.A./M.A.K./452/Tax (Trib.) Appeal accepted,