2002 PLP 2129 (PTD)

4. The impugned disallowance supra was set aside by learned C.I.T. (Appeals) vide Order No.871, dated 8‑12‑1998 in the following words: "At the time of appeal's hearing, the appellant's A.R. contended that expenses under the head salary were entirely verifiable because the salary was paid to the employees through crossed cheques and that the I. D. Cards of employees were made available to the Assessing Officer. The appellant's contention needs verification and accordingly the case is remitted back to the Assessing Officer with the advice that if the appellant's contention is correct. expresses be allowed in full and if there is any discrepancy, the expenses be curtailed as are deemed fit."

5. The then D.C.I,.T. Circle 2, Islamabad, Mr. Nisar Ahmad, made a reassessment in pursuance of the Order of C.I.T. (Appeals) `supra whereby somehow, he determined the tax liability of complainant at an exorbitant amount of Rs.6,17,

478. He, allegedly, did not serve a copy of the order on the complainant.

6. The C.I.T., Islamabad Zone took cognizance of the matter under section 138 of the Income Tax Ordinance, 1979, called for the assessment records and, after examining it, passed an order in the following terms: It is noted that assessment order for assessment year 1997-98 under sections 62/132 was made on 8-6-2000 at net income of Rs. 14,035,589 resulting in tax demand of Rs. 5.17,

478. It is indicated on the demand notice that it has been sent be registered post but there is no proof of service of demand notice available on record. Moreover, the facts of this case need a thorough examination and the assessee has also to be provided with adequate opportunity of hearing. In .view of these facts, assessment for assessment year 1997‑98 is hereby set aside with the directions that during de novo proceedings adjudication should be made in a judicious manner in the light of facts and circumstances of the case after affording the petitioner with the reasonable opportunity."

7. Regarding the assessed exorbitant income at Rs.14,356,589 under sections 62/132, since set aside by the C.I.T.‑through his order under section 138 of the Income Tax Ordinance, 1979 (supra), the R.C.I.T. submitted that assessment was framed, in the light of report received from Intelligence and Investigation, by making appropriate addition under section 13(1)(aa) of the Income Tax Ordinance, 1979 with the prior approval of I.A.C. He further submitted that assessment proceedings had been initiated in October and as per order sheet entry, dated 6‑10‑2001, the Assessing Officer needed further time and clarification while examining the detail/documents filed by assessee and by issuing a detailed notice under section

62. As per Income‑tax Law, time limit for finalization of the assessment was up to 30‑6‑2002.

8. Counsel of the complainant‑submitted that the learned R.C.I.T. still had not appreciated that assessment was remitted by the C.I.T. (Appeals) with specific direction to re‑examine only the salary account of the petitioner. Any action warranted on the basis of any fresh information that was not on record by the date of original assessment, would require a notice to initiate such proceedings in accordance with relevant provisions of the Ordinance. The A.C.I.T., therefore, was not required to step out of the parameters set for him by his supervisory judicial authority either in the re‑assessment order, since set aside under section 138, or to so construe the order under section 138 for purposes of reassessment proceedings taken up thereafter. Reliance was placed by the counsel, in support of his contention, on (1981) 127 ITR 453 (A.P.) where P.A. Chaudhry, J. speaking for the Court had held, "once it is recognized that section 251(i)(a) authorizes A. A. C. to issue directions, it shall follow that the Income‑tax Officer cannot act contrary to those directions" (page 549). In another case cited as (1959) 35 ITR 673 (A.P.) Satyanaryana Raju, J. had held, "the order was specific and all that the A.A.C. directed the officer to do was to receive a duplicate copy of the application for registration and dispose it of in accordance with law, and therefore, it was not open to officer to conduct a fresh enquiry and proceed to make a fresh assessment .... And he would certainly be transgressing the limits laid down by law if he were to embark upon a fresh enquiry as to the quantum of income or the loss incurred by the petitioner".

9. The learned counsel of the complainant submitted that the learned C.I.T. while setting aside the unlawful reassessment order vide his order passed under section 138, was supposed to give directions to the D.C.I.T. to proceed as directed by the learned C.I.T. (Appeals) in his order under section 132, dated 8‑12‑1998 (supra). Any other construction of the order passed under section 138 would render it prejudicial to the assessee.

10. Mr. Raza Munawar, the Special Assistant to the C.I.T. appearing on behalf of the respondent reiterated what was submitted in the written reply of the respondent. However, he was unable to rebut the contention of learned counsel of the complainant that the jurisdiction of the D.C.I.T., in the ongoing proceedings, is confined to follow the directions of the C.I.T. (Appeals) on the issue the case was remitted back to the Assessing Officer and that no order could be passed under section 138 to extend the jurisdiction of the D.C.I.T. beyond giving effect to the specific directions of the C.I.T. (Appeals) while passing an order in pursuance of order under section 132 of the Ordinance.

11. It. is well‑settled that where a case is remanded with specific directions or for deciding a particular issue, the officer concerned (Assessing Officer in the present case) has to restrict the proceeding within the four corners of the directions. Any attempt to ignore, cross, exceed, or reduce the directions will be illegal unauthorized and beyond his jurisdiction. He has to follow the direction and cannot act contrary to it. If the direction is to reconsider a particular issue, then the concerned officer has to restrict the proceeding to that issue and cannot reopen the whole case. Such acts of omission and commission amount to maladministration. The C.I.T. while passing order under section 138 did not notice that the D.C.I.T. while passing assessment order after remand has not followed the direction given by the C.I.T. (Appeals).

12. Considering these principles in view the cumulative effect of orders passed under section 132 and under section 138 would be that the D.C.I.T. will restrict the proceeding to the extent of the remanding order passed under section

132. It is recommended that: (i) The D.C.I.T. to hear the case afresh on issue and direction contained in the remanding order passed by the C.I.T. (Appeals) under section 132 of the Income Tax Ordinance. (ii) The D.C.I.T., Circle 2, Islamabad to hear and decide the case in terms of para. (i) above after affording proper opportunity to the complainant to produce evidence and of being heard within 30 days. (iii) Compliance be reported within 45 days. C.M.A./M.A.K./285/FTO Order accordingly.