2002 PLP 2379 (PTD)

SHAH JEHAN KHAN, J.

The petitioner, an assessee under the Income Tax Ordinance has questioned the legality of the order of re assessment passed by the Assistant Commissioner Income-tax respondent No. 1 for the year 1994-95 and the order passed by the respondent No.4, dated 22-8-2001 whereby the re-assessment order of respondent No. 1 was held.

2. The petitioner's case of self-assessment for the financial year 1994-95 was re-opened under section 65 of the Income Tax Ordinance and the petitioner was held liable for additional amount of Rs.13,02,

000. The assessment order was challenged for want of requisite notice under section 13(1) (aa) and the requisite approvals before the Additional Commissioner of Appeal Income Tax/Wealth Tax, Rawalpindi. The appeal was allowed vide order, dated 1-12-1997 and the assessment order was set aside but an observation was made that case of the petitioner be re-opened after issuing requisite notice to the petitioner. Still feeling aggrieved to the extent of direction to the authorities to re-assess after issuing the notice, preferred second appeal to the Income Tax Appellate Tribunal which was accepted vide order, dated 30-11-1998 and the assessment order was annulled.

3. Since section 62(a) of the Income Tax Ordinance was suspended on 26-10-1987 and on its re-enforcement, w.e.f. 1-7-2000 case of the petitioner was re-processed and re-assessment order was passed on 30-4-2001. Considering the re-assessment order in violation of the order of Income Tax Appellate Tribunal, dated 30-11-1998 the petitioner approached the Tribunal for proceedings against the re-assessing authorities for initiation of contempt proceedings, vide impugned order, dated 22-8-2001 the Income Tax Appellate Tribunal respondent No.4, rejected the application of the petitioner on the ground that after annulment of the assessment order the Assessing Officer had the power to re-open the assessment under section 62(a) of the Income Tax Ordinance read with C.B.R. Circular No.6 of 1997, dated 5-7-1987 read with clause (7) of Part IV of the Second Schedule and section 30 (iv) of the Finance Ordinance, 2000.

4. We heard the learned counsel for parties and also perused the record. It was forcefully contended by the counsel for petitioner that after decision of the Income Tax Appellate Tribunal, dated 30-11-1998 whereby the re-assessment was annulled the only remedy available to the Income Tax Authorities was to make a reference to the High Court under section 136 within 90 days but without availing that remedy the Income Tax Authorities were not competent to re-open the assessment case of petitioner for the year 1994-95. Further contended that section 62(a) whereunder re-assessment could be made remained suspended from 26-10-1987 to 1-7-2000 and thus not in the field. Also contended that neither any approval was obtained from the Inspecting Additional Commissioner as required under section 13(1)(d) nor any notice was served upon the petitioner as required under section

13. In addition to the above infirmities the re-assessment was barred under section 66(c) of the Income Tax Ordinance where under only within a period of one year the process of re-assessment could be made and after decision given by Income Tax Appellate Tribunal on 30-11-1998 the Income Tax Authorities were not competent to issue any notice to the petitioner after lapse of one year. The re-assessment is even barred under section 65(3) as more than 5 years had lapsed after the submission of self-assessment for the financial year 1993-94.

5. The learned counsel for the Income-Tax Department contended that after re-enforcement of section 62(a) of the Income-tax Ordinance the Authorities were competent to re-assess the Income-tax of the petitioner and that by order of the Income-tax Appellate Tribunal, dated 30-11-1998 the earlier assessment order was merely annulled and re assessment could be ordered under section 66(c) within a period of two years and the petitioner-assessee was served with the show-cause notice on 25-5-2000.

6. The assessment order of the Income-tax Officer Circle 13 Abbottabad, dated 24-4-1997 was questioned in an Appeal No.4911 instituted on 5-8-1997 and the appeal was accepted in the following terms:

"The perusal of record shows that case has not been properly handled and the appellant was not specifically asked to explain his position either through notice under section 62 or under section 13 of the Income Tax Ordinance. The assessment thus made by passing the legal requirements cannot be sustained and, therefore, set aside with the directions that re-assessment should be made after giving the appellant an appropriate opportunity to explain his position after serving upon him statutory show-cause notice." Though the petitioner's appeal was accepted and the assessment order was set aside but still feeling aggrieved from the second part of the judgment whereby the Income Tax Authorities were directed to re-assess after giving appellant an appropriate opportunity through serving show-cause notice upon him, preferred a Second Appeal bearing I.T.A. 177 (PB) of 1997-98. In the said appeal it was sought that the First Appellate Court was required to out rightly annul the re-assessment and was not competent to afford and second opportunity to the Income Tax Authorities for re-opening the case after serving show-cause notice on the petitioner-assessee. Reliance was placed on 1992 PLD (Trib.) 455 and PTCL 1987 CL

595. The Division Bench of the Appellate Tribunal accepted the appeal in the following terms:

"As the authorities cited above support that the service of notice under section 13(1)(aa) (2) is a must upon the assessee before taking any investment as deemed income and as it has been specifically stated in the later authority that such an investment is to' be deleted instead of setting aside the assessment order which provides fresh lever in the hands of department for filling in the lacuna of law as omitted in the earlier assessment. Though, these are opinions of the Single Benches but, we respectfully agree with them and confirm the views expressed therein. As a result this appeal is accepted and the assessment order is annulled."

7. There is no ambiguity in the aforesaid finding of the Appellate Tribunal that providing another opportunity to the Income Tax Authorities to fill in the lacuna was declared illegal in view of the cited judgment. It is also an admitted fact that finality is attached to the aforesaid order of the Appellate Tribunal as no reference or appeal was' filed in the High Court under section 136 of the Income Tax Ordinance. The contention of the counsel for Income Tax Authorities that by annulling the assessment order would not deprive the authorities from re opening the case of re-assessment under section 62(a) is not convincing. B If the said contention is accepted it would amount to restoration of the order of the First Appellate Court whereby the Income Tax Authorities were directed and empowered to re-assess the income of the petitioner after serving the requisite show-cause notice on him. In such an eventuality, had it been the intention of appellate Tribunal to empower the Assessing Officer for re-assessment they should not have accepted the appeal but must have modified the order of the Appellate Court to the extent of word "setting aside" by the word "annulled". But the Appellate Tribunal was unequivocally accepted the appeal of petitioner as under the: directions in the order of First Appellate Court it was found that another opportunity of filling in the lacuna was provided to the Income Tax Authorities. The relief granted to the petitioner vide judgment of the Appellate Tribunal, dated 30-11-1998 was that the case of the petitioner for the assessment year 1994-95 was finally closed once for all.

8. In view of the above we arrived at the conclusion that the re assessment order, dated 30-4-2001 by the Assistant Commissioner Income-tax/Wealth Tax Circle 17 Abbottabad was ultra vires and without jurisdiction and the impugned order of the Appellate Tribunal, date 22-8-2001 affirming the said re-assessment is super-structure of the said illegal assessment order. The Income Tax Appellate Tribunal was required to honour its own final order, dated 30-11-1998 but the same was nullified without any legal sanctity. We, therefore, accept this writ petition, set `aside the assessment order, dated 30-4-2001 passed by the Assistant Commissioner Income Tax /Wealth Tax Circle 17 Abbottabad and order of the Tribunal, dated 22-8-2001 in M.A. No.90/(PB) of 2000-2001. No order as to costs. S.A.K./M.A.K./523/P Petition accepted.