1996 PLP (Trib (PTD)

22. The Delhi High Court while placing reliance on the decision of Supreme Court of India in the case of Central Provinces Manganese Ore Co. Ltd. v. C.I.T. (1986) 160 ITR 961 wherein a pela was accepted that the contention that no default in the payment of. Advance- tax was there and, therefore, interest was not liable to be imposed can be agitated in appeal before the AA.C. held that to this limited extent the imposition of interest under section 217 of the Act can be challenged. In the case of Central Provinces Manganes Ore Co. Ltd. referred to above the Supreme Court of India held that the levy of interest was a part of the process of assessment and thus it was open to an assessee to dispute the levy in appeal. In another case by the Delhi High Court Caltex Oil Refining Ltd. v. C.I.T. (1994) PTD 481 - 202 ITR 375, it has been held that there is no inherent right of appeal. It is to be specifically conferred by the statute providing for an appeal. But if there is a provision conferring a right of appeal it should be read in a reasonable practical and a liberal manner. In this case a question was referred to the Delhi High Court as follows:-- "Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that no appeal lay to the A.A.C. of Income tax against the computation of interest under section 214 made by the I.T.O."

23. It was contended before the Delhi High Court that appeal lies to the A.A.C. under clause (c) of section 246 of the Indian Income Tax Act, 1961. It was further argued that the compitation of interest under section 214 is a part of the process of assessment and that the allowance/disallowance or allowance of a lesser amount affects the assessment. As such an appeal against an order under section 214 is in fact an appeal against an order of assessment under section 143 of the Act. It was further submitted that the interest under section 214 is in fact and substance a part and parcel of the tax and has the effect of enhancing or reducing the amount of tax determined by the I.T.O. in an order of assessment under section 143 of the Act. The Delhi High Court after considering the judgments by the Supreme Court of India reported as (1986) 160 ITR 961 and (1991) 188 ITR 327 as well as (1963) 48 ITR 34 came to the conclusion that interest under section 214 was a part of assessment. In arriving to this conclusion reliance was placed on the following observation of the Supreme Court of India:-- "The word assessment is used in the proviso not as an- equivalent of the tax calculated at the rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of order is to touch the pocket of the assessee and in our opinion this was such a case."

24. It was held by the Delhi High Court that there is no scope for doubt that an assessment under section 143(3) would include not only determination of the amount of tax calculated at the rate prescribed under the Finance Act but also interest or any other thing which has the effect of reducing or enhancing the total amount payable by the assessee under such an assessment. The Delhi High Court ultimately held that:-- "We are of the opinion that interest under section 214 is a part of assessment and is deemed to be taxed for the purpose of this Act including clause (c) of section 246 an appeal by an assessee aggrieved by an order of assessment made under section 143(3) or section 144 of the Act, either original or in consequence of an appellate order with a view to giving effect to the directions contained therein, objecting to the amount of interest payable by the Government under section 214 of the Act to the assessee as determined by the I.T.O. is, therefore, maintainable under clause (c) of section 246 of the Act."

25. After having a resume of the case-law mainly from the Indian jurisdiction considering right of appeal in respect of an order levying additional tax/penal interest on account of default in payment of advance tax which is mainly based on the provisions contained in section 18-A (6) and (8) and section 30 of the repealed Income Tax Act, 1922 and the provisions contained in sections 214, 215 and 217 of the Indian Income Tax Act, 1961 and section 246 of the said Act we revert to the brief facts in the appeals under consideration before us. In all these appeals the point of controversy is over the maintainability of an appeal under section 129 of the Income Tax Ordinance, 1979 before the A.A.C. against the levy of additional tax under section 87 of the Ordinance, subsequent to the passing of the assessment order.

26. In all the cases under consideration before us the assessing officer omitted to levy additional tax under section 87 of the Ordinance while making the assessments and he subsequently proceeded to pass separate orders under section 87(1) of the Ordinance and issued IT-30 as well as notices of demand in all such cases. The appeals were filed by the respective assessees before the first, appellate authorities under section 129 of the Ordinance and all the appeals have been decided on merits. The learned first appellate authorities have treated the order under section 87 of the Ordinance as rectification orders passed under section

156. The first appellate authorities cancelled penalties in certain cases after holding that the same were barred by limitation under section 156 of the Ordinance whereas in other cases the orders of the assessing officer levying the penalties were maintained as valid orders. In one of the case order for assessment year 1987-88 has been held to be invalid for want of notice under section 156 of the Ordinance. The department has filed appeals in cases where the orders passed under section 87 have been cancelled whereas in other cases where the assessee's appeals have been dismissed further appeals have been filed against the maintenance of levy of additional tax under section 87 of the Ordinance.

27. We have heard M/s I.N. Pasha, Rehan Hasan Naqvi Farogh Nasim, learned Advocates for the assessees and Mr. Basharatullah, learned D.R. for the Department. The learned representatives for the parties have stated that there is no dispute on the point that if penal interest under section 87 is levied alongwith the main assessment order and the assessee prefers appeal raising objections on other points as well he has right to raise objections to the levy of additional tax under section 87 as well. The learned representatives for the parties have confined their arguments to the maintainability of appeal against a separate order under section 87 after the completion of assessment. The learned representatives for the assessees have submitted that although in section 129 it is not specifically provided that an appeal shall lie against an order under section 87 as well but the omission of section 87 and other allied sections from section 129 is immaterial as an appeal has been provided against the main assessment order and the levy of additional tax is a part of assessment order. Thus an objection to the levy of additional tax under section 87 amounts to an objection against the assessment order under section 59 or 59-A, 62, 63 and

65. They have further contended that the assessing officer is required to levy additional tax alongwith the main assessment order and if there is omission on his part and a separate order is made under section 87 after the completion of assessment it should be deemed to be rectification of mistake and thus such separate order would also be appealable first for the reason that it is a part of assessment order itself and secondly for the reason that appeal is specifically provided under section 156 of the Income Tax Ordinance, 1979. Mr. Pasha has submitted that levy of additional tax not resulting from assessment is not visualized under the Ordinance as no machinery has been provided for recovery of such tax and there is no mechanism either for charging such tax or recovery thereof. Mr. Pasha has further submitted that the recovery can be affected after service of notices under section 85 and according to the definition of tax contained in section 2(43) of the Income Tax Ordinance, 1979 tax means additional tax chargeable or payable under the Ordinance as well. According to Mr. Pasha even according to the prescribed form of notice of demand to be served upon the assessee under section 85 by rule 192 of the Income Tax Rules, 1982, the same situation emerges. He has submitted that only two forms of notices of demand under section 85 have been prescribed under Rule 192 of the Income Tax Rules, 1982 one pertaining to the assessment which covers the levy of additional tax as well and the other is in respect of penalty. Mr. Rehan Hasan Naqvi has contended that the levy of additional tax enhances the liability of an assessee and under section 129 of the Income Tax Ordinance, 1979 every order increasing the liability of an assessee is subject to appeal before the AA.C. Mr. Farogh Nasim has submitted that every order creating or enhancing liability is an assessment and the, law has provided appeal against such assessment order. He has submitted that an assessee cannot be deprived of the right of appeal until and unless it is expressly barred. He has further submitted that under Article 227 of the Constitution of the Islamic Republic of Pakistan read with Article 2-A the existing laws must be interpreted as far as possible keeping in view principles of interpretation in Islam specially in cases of fiscal statutes. In this behalf, he has placed reliance on a recent judgment of Hon'ble Lahore High Court in the case of M/s. Maple Leaf v. Collector of Central Excise and Sales Tax PTCL 1993 CL 656 wherein Mr. Justice Malik Muhammad Qayyum by placing reliance on the judgment of Hon'ble Supreme Court of Pakistan in the case of M/s. Siemen A.G. PLD 1991 SC 368 observed as follows: "In the Islamic policy and system of dispensation of justice the importance of the right of appeal cannot be understated. It has been held to be a natural right vesting in an individual, which cannot be taken away even by a provision in the enactment. It is ordained by Holy Qur'an and Sunnah that a person must have right to go in appeal against a decision. In Pakistan through Ministry of Defence v. The General Public PLD 1989 SC 6 the Supreme Court went to the extent of striking down the laws which did not provide for a right of appeal."

28. The learned representatives for the assessees have further submitted that mere absence of particular section in the provision conferring right of appeal is not sufficient per se to exclude the orders under those sections from the purview of appeal if in fact it can be shown that the orders passed under particular sections actually fall within the purview of those sections/orders which are subject to the right of appeal. In this behalf they have contended that under the Income-tax Act, 1922 no specific right of appeal against an order under section 35 (rectification of mistake) was provided and it was held in various cases in the Indian jurisdiction that no appeal lay against an order under section

35. However, it was held by Dacca High Court and Sindh High Court that an order under section 35 rectifying a mistake was an appealable order for the reason that actually it was apart of assessment order.

29. On the other hand, it has been urged on behalf of the department that section 87 of the Income Tax Ordinance is an independent section and, therefore, any order passed under section 87 after the completion of assessment should be treated as an independent order and not a part of the main assessment order by way of rectification under section 156 of the Income Tax Ordinance. Taking-the arguments further the learned D.Rs have submitted that an order under section 87 being an independent order no appeal against such an order can be preferred for the simple reason that no such appeals are provided specifically in section 129 of the Income Tax Ordinance, 1979. The learned D.R. has further submitted that so far the contention regarding issuance of demand notice is concerned it can be issued in respect of additional tax levied under section 87 in the first proforma prescribed under Rule 192 of the Income Tax Rules, 1982 which contains an entry in respect of additional tax as well. The learned D.R. in support of his contention that no appeal lies against an order under section 87 has further placed reliance on the judgment of Hon'ble Supreme Court of Pakistan reported as (1991) PTD 663.

30. The learned representatives for the assessee further took a plea that an order under section 87 is required to be made either before the completion of assessment or at the most alongwith the assessment order and, therefore, if the assessing officer omits to make an order under section 87 alongwith main assessment order the omission can be rectified by way of rectification of mistake envisaged under section 156 of the Income Tax Ordinance. The plea taken on behalf of the department is that under the provisions contained in section 18-A (8) of the repealed Income-tax Act, 1922 the additional tax was required to be calculated in the manner laid down in subsection (6) of section 18-A and was required to be added to the tax as determined on the basis of regular assessment. However, with the promulgation of Income Tax Ordinance, 1979 no such conditions has been laid down in section 87 of the said Ordinance. The learned D.R. has submitted that in section 87 it has not been provided that the additional tax shall be levied on making the regular assessment and, therefore, when the legislature has not specified any particular time or stage for levying additional tax under section 87 it is within the discretion of the assessing officer to levy the same at any time by an independent order. It is in his discretion to make the order- levying additional tax before the completion of an assessment, alongwith the main assessment order or subsequent to the completion of assessment order. According to the learned D.R. the exercise of discretion by the assessing officer in levying the additional tax under section 87 at any time after the completion of assessment shall not be deemed to be mistake apparent on record rectifiable under section 156 and, therefore, time frame provided under section 156 shall also not be applicable and it would be an independent order against which no appeal lies to the AA.C./C.I.T.(A) for the reason that no such appeal is provided in section 129 of the Income Tax Ordinance.

31. We have carefully considered the contentions raised on behalf of the learned representatives for the parties. Although during the course of arguments before us no dispute has been raised on the point of maintainability of appeal against an order under section 87 alongwith the main assessment order and the main plank pf arguments on behalf of the parties is in respect of the maintainability of appeal against a separate order under section 87, but we are of the opinion that all the facts of the issue on the point of maintainability of appeal under section 87 should be examined in order to effectively adjudicate upon the question which has been referred to us. The point for consideration before this Larger Bench is, "Whether an order under section 87 is appealable under any circumstances." It appears to us that the issue relating to the maintainability of appeal against an order under section 87 as a part of the appeal against main assessment order has not been contested because of the earlier judgments of this Tribunal (1962) Tax (V) - 54 and other subsequent orders in which the judgment of Bombay High Court in the case of C.I.T. v. Jagdish Parshad Ramnath (1955) 27 ITR 192 was followed. We have shown in the earlier part of this order that there was no unanimity of view between various High Courts in India. The views held by various High Courts in India have undergone changes from time to time and the controversy has not been settled till now. In subsequent judgments various High Courts from Indian jurisdiction have leaned in favour of maintainability of the appeal mainly on the ground that the levying of advance tax is a part of the process of assessment and that any order enhancing the liability of an assessee and increasing the tax burden is a part of assessment. The controversy has persisted in Indian jurisdiction because of the provision contained in section 30(1) of the repealed Income-tax Act, 1922 and the re-enactment of similar provisions in section 246(c) in the Indian Income Tax Act, 1961. However, the law has been amended in Pakistan with the repeal of Income-tax Act, 1922 and enactment of section 129 providing appeals to the Appellate Additional Commissioner (previously called as Appellate Assistant Commissioner). We will discuss the effect of amendment presently. Thus in order to resolve all the controversies in respect of maintainability of appeal against an order under section 87 the following points require consideration: (1) Whether payment of advance tax under section 53 and the levy of additional tax under section 87 in the case of default is a part of the process of assessment? (2) At what point of time an assessing officer is required to pass an order under section 87? (3) Whether an order under section 87 made at the time of main assessment is appealable? (4) If an order under section 87 is not made at the time of assessment whether it could be made subsequently, if so, whether, it will be treated as an independent order under section 87 itself or it would be treated as an order under section 156 by way of rectification of mistake? (5) If a finding required to be given at the time of assessment forms part of the assessment and such finding is omitted deliberately or by mistake and is given subsequently, whether it can still be treated as part of assessment, if so, its effect? (6) If a finding under section 87 at the time of original assessment confers a right of appeal, whether an assessee can be deprived of this right as a result of deliberate omission on the part of an assessing officer or as a result of bona fide mistake on his part'? (7) Whether a valuable right of appeal, which is predominantly a substantive right, can be taken away from a party or an assessee can be deprived of such right for none of his fault and in consequence of a mala fide act on the part of assessing officer or bona fide mistake?

32. The term "assessment" has been defined in section 2(7) of the Income Tax Ordinance, 1979 as follows: "Assessment includes re-assessment and additional assessment and the cognate expressions shall be construed accordingly."

33. Chapter VII of, the Income Tax Ordinance, 1979 is titled as "assessment" and is comprising sections 55 to

67. Chapter VII contains the procedural provisions in respect of assessment. The process starts with the filing of return of total income under section 55 and ends with section 67, which has provided for reference to valuers and has conferred authority on C.B.R for making rules to give effect to the provisions of section

67. Section 62 provides that the Deputy Commissioner of Income-tax, after considering the evidence on record, shall by an order in writing assess the total income of the assessee and determine the tax payable by him on the basis of such assessment. Section 67 has provided that where in the course of any, "assessment proceedings" the Deputy Commissioner is of the opinion that the value of any capital asset shown in any return, statement or other document furnished by an assessee is not correct he may, either on an application by the assessee or otherwise, refer the matter to a valuer for ascertaining the proper value of such asset. These provisions indicate that the assessment is entire set of proceedings whereby total income of an assessee is determined and on the basis thereof the tax payable is computed and thereafter the recovery of tax is effected Thus, process of determining the total income, computation of the tax payable and the recovery of such tax collectively and cumulatively form part of assessment. The taut has been defined in section 2(43) of the Income Tax Ordinance to mean income-tax, super-tax, surcharge and additional tax chargeable or payable under the Ordinance and includes any penalty, or other charge or any sum or amount leviable or payable under the Ordinance. The expression "assessment" came for consideration in large number of cases before the superior Courts in the Indo-Pakistan sub-continent and before the Privy Council. It has been held that the word "assessment" has a very wide meaning. The Privy Council in C.I.T. v. Khemchand Ramdas (1938) 6 ITR 414 observed: "In order to answer then it is essential to bear in mind the method prescribed by the Act making an assessment to tax, using the word assessment in its comprehensive sense as including the whole procedure for imposing liability upon the tax payer." '

34. The Supreme Court of India in the case of Lakshaman Shenoy v. I.T.O. Ernakulam (1958) 34 ITR 275 held that: "Now the question is in what sense has the word "assessment" been used in section 13(1) of the Finance Act, 1950...Moreover the coalition of the words levy, assessment and collection indicates that what is meant is the entire process by which 'the tax is ascertained, demanded and realized."

35. In the case of CA. Ibrahim v. I.T.O. Kottayam (1961) 41 ITR 425, the Supreme Court of India observed as follows: "A review of the provisions of Chapter IV of the Act sufficiently discloses that the word `assessment' has been used in its wider connotation in that Chapter. The title of the Chapter is `Deductions and Assessment'. The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18-A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions therein. Section 23-A deals with power to assessee individual members of certain companies on the income deemed to have been distributed as dividend, section 23-B deals with assessment in case of departure from taxable territories, section 24-B deals with collection of tax out of the estate of deceased persons, section 25 deals with assessment in case of discontinued business, section 25-A with assessment after partition of Hindu undivided families and sections 29, 31, 33 and 35 deals with the issue of demand notices and the filing of appeals and for reviewing assessment and section 54 deals with `assessment' of incomes which have escaped assessment. The expression `assessment' used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that, when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and. not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof."

36. Justice Tandulkar of the Bombay High Court held in the case of Bhai Lal Amin and Sons Limited v. R.K. Dalal (1953) 24 ITR 229 as follows: "But apart from this in my opinion the words for the purpose of levy assessment and collection of income-tax include all procedure for the levy, assessment and collection of income-tax for without the procedure there can be no levy assessment or collection and taking any particular assessment with which we are concerned in this petition the assessment is not final until all remedies by way of appeals which are given by the Act are exhausted."

37. In the case of Kalawati Devi Harlalka v. C.I.T. West Bengal (1967) 66 ITR 680 the Supreme Court of India held that: "It is quite clear from the authorities cited above that the word `assessment' bear a very comprehensive meaning; it can comprehend the whole procedure for ascertaining and imposing liability upon tax payer." 38, We have shown in earlier part of the order that in Indian jurisdiction now the consensus appears to have been developed that the word "assessment" is not confined to mere determination of total income and computation of tax or to the final act determining the tax liability. Tire expression assessment does not have a restricted connotation. It is not used merely in the sense of computation of income but covers the entire procedure for determination and imposition of tax liability including the payment of advance tax as advance tax has also been held to be a tax. It is inclusive of entire procedure of assessment creating tax liability and the machinery provisions for the enforcement thereof.

39. Now we revert to the provisions contained in section 53 of the Income Tax Ordinance, 1979 In order to ascertain the nature of advance tax. Section 53 reads as follows: "

53. Advance payment of tax.

(1) Where the total income of any assessee (excluding income to which section 27 or section 80-B or section 80-C or section 80-CC or subsections (1) and (2) of section 50 apply) for the latest assessment year in respect of which the tax payable by him has been determined under sections 59, 59-A, 60, 62, 63 or 65, is in the case of a company not less than fifty thousand rupees, and in other cases not less than one hundred fifty thousand rupees, he shall pay, by way of advance tax, to the credit of the Federal Government, on or before the fifteenth day of September, the fifteenth day of December, the fifteenth day of March and the fifteenth day of June in each financial year, an amount equal to one fourth of the full amount of income tax and super tax so determined to be payable in respect of that assessment year (without making any adjustment for any tax already paid by way of advance tax or otherwise), as reduced by the tax, if any, already collected or deducted and paid under section 50 in the said financial year, (1-A) in the case of non-resident assessee, dividend income shall be excluded from the total income for the purposes of subsection (1). (2) if any assessee who is required to make payment of advance tax under subsection (1) estimates at any time before the last instalment is due, that the tax payable by him for the relevant assessment year is likely to be less than the amount he is required to pay under subsection (1), he may furnish to the Deputy Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under subsection (1), in equal instalments on such dates as have not expired. (3) Any sum paid under subsection (1) or subsection (2) shall be treated as an advance payment of tax in respect of the assessment year commencing on the first day of July next following the financial year in which it is paid or, in the case of an assessee to whom section 72 or section 81 applies, the assessment year in which the "said date" as referred to therein, falls, whichever is the later, and credit therefor shall be allowed to the assessee in computing the tax payable by him for the said assessment year."

40. A perusal of subsection (3) of section 53 shows that any sum paid under subsection (1) or subsection (2) shall be treated as an advance payment of tax in respect of the assessment year commencing on the first day of July next following the financial year in which it is paid and that credit therefor shall be allowed to the assessee in computing the tax payable by him for the said assessment year. It is thus quite clear that the advance tax received from an assessee shall be taken into consideration in computing the tax payable by assessee and the computation of tax payable is made during the process of assessment and finally while completing the assessment. Thus by virtue of the provisions contained in subsection (3) of section 53 the payment of advance tax becomes a part of the process of assessment. The additional tax levied under subsections (1) and (2) of section 87 cannot be imposed without considering the facts and law necessary for attracting the provisions contained in subsections (1) and (2) of section

53. For the purpose of levying additional tax under section 87 the provisions contained in subsections (1) and (2) of section 53 are required to be considered without which it cannot be decided if the additional tax is liable to be paid or not and thus by levying additional tax under section 87 the provisions contained in section 87 and section 53 are to be read together. The result is that the provisions contained in section 53 and section 87 not only create a liability on the part of an assessee and thus becoming a part of the process of assessment but in fact the provisions contained in these two sections are so integrated with the process of assessment that without making them a part of the process of assessment the real tax liability of an assessee cannot be determined and ascertained. The answer to the question No.l is, therefore, in affirmative.

41. The next question is at what point of time an assessing officer is required to pass an order under section

87. The learned D.R. has submitted that under the provisions of repealed Income-tax, Act, 1922 an order levying the additional tax could be made either before the completion of assessment or at the time of making the regular assessment. He has submitted that under subsection (8) of section 18-A of the repealed Income-tax Act the I.T.O. was required at the time of making regular assessment to examine if the advance tax has been paid as required under the law or not and in case of default he was required to calculate the additional tax in the manner laid down in subsection (6) of section 18-A and add the same to the tax as determined on the basis of regular assessment. The learned D.R. has submitted that with the promulgation of Income Tax Ordinance, 1979 no such conditions has been retained and, therefore, now the assessing officer can make an order under section 87 prior to the completion of assessment, at the time of completion of assessment or subsequent to the completion of assessment at his discretion. He has submitted that the requirements of adding the additional tax at the time of regular assessment has been done away with in the Income Tax Ordinance, 1979. We are not persuaded to agree with the contention of learned D.R. for the reason that under subsection (3) of section 53 the credit for advance tax is required to be given in computing the tax payable by him for the relevant assessment year. It is provided in subsection (2) of section 53 that an assessee who is required to make payment of advance tax under subsection (1) may estimate at any time before the last instalment is due that the tax payable by him for the relevant assessment year is likely to be less than the amount he is required to pay under subsection (1) and thereafter pay the advance tax according to his estimate. A further restriction is placed under subsection (2) of section 87 that if the tax so paid on estimate basis is less than 80% of the tax chargeable for the relevant assessment year, he shall be liable to pay additional tax on the amount by which the tax paid by him falls short of the said 80% and such additional tax shall be calculated from the first day of April in that year to the date on which assessment is made or the thirtieth day of June of the financial year next following whichever is earlier. Now both these provisions are to be read together, and the provisions are so inter-connected and integrated that without reading the two provisions together it is not possible to ascertain the advance tax liability on estimate basis. It becomes abundantly clear that all, this exercise is to be done at the time of completion of assessment. When the expression "and credit therefor shall be allowed to the assessee in computing the tax payable by him for the said assessment year" and the expression "any assessee fails to pay tax under subsection (2) of section 53 or the tax so paid is less than 80% of the tax chargeable for the relevant assessment year" clearly indicate that notwithstanding the omission of word "regular assessment" when compared with section 18-A (8) of the repealed Income Tax Act, 1922, the intention of the Legislature is very clear that even under the Income Tax Ordinance, 1979 the advance tax required to be paid by an assessee and in the case of default additional tax payable by him is to be calculated and imposed at the time of completion of assessment. Thus we are of the opinion that on reading all the relevant provisions contained in the Income Tax Ordinance, 1979 including section 62 which requires that the Deputy Commissioner shall by an order in writing assess the total income of the assessee and determine the tax payable by him on the basis of such assessment, an order under section 87 is required to be made either before the completion of assessment or at the most at the time of completion of assessment.

42. We now proceed to examine whether an order under section 87 made at the time of main assessment is appealable. As there is no dispute between the parties on this point, therefore, we will not examine this issue in detail but would like to throw some light as it will help us in determining whether an order separately made under section 87 is appealable or not. We have already shown that a lot of controversy has taken place in Indian jurisdiction on the point if an order levying additional tax on account of default in paying advance tax is appealable or not even if such order is made with the main assessment. The reason is that under section 30 of the repealed Income-tax Act, 1922 it was provided that, "any assessee objecting to the amount of income assessed under section 24 or the amount of loss computed under section 24 or the amount of tax determined under section 23 or denying his liability to be assessed under this Act, or objecting to the assessment being made under subsection (4) of section 23 or objecting to the cancellation by an I.T.O. of the registration of a firm under subsection (4) of section 23 may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal of order." Thus, the right of appeal provided in section 30 of the Income-tax Act, 1922 was not absolute but was subject to several conditions. Likewise under section 246(c) of the Indian Income Tax Act, 1961 an assessee may appeal to the Appellate Assistant Commissioner against, "an order against an assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under subsection (3) of section 143 or section 144, where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed." Thus, while examining if an appeal could be filed before the AA.C against an order levying additional tax on account of default in paying advance tax the order was required to be brought under the parameters prescribed in the provisions cited above. On the other hand, under section 129 of the Income Tax Ordinance, 1979 it is provided as follows: "129: -Appeal to the Appellate Additional Commissioner..

(1) Any assessee objecting to an order made by Deputy Commissioner under section 59 or 59-A, (where any adjustment has been made under subsection (3) or subsection (2), respectively, of those sections) 62, 63, 65, 68, 75, 80, 80-A, 91, 98, 99, 105 -to 112 (inclusive), 114 or subsection (2) of section 148, or an order under section 52, treating a person to be an assessee in default, or an order under section 78, treating the assessee as an agent of a non-resident, or an order under section 156 refusing to rectify the mistake either in full or in part, as claimed by the assessee or having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the assessee may appeal to the Appellate Additional Commissioner against such order.

43. A perusal of the above provision shows that under section 129 of the Income Tax Ordinance, 1979 an assessee can prefer an appeal against all or any part of the order of assessment under sections 59, 59-A, 62, 63, 65 and other orders enumerated therein. The right of filing an appeal is not subject to further conditions as laid down under section 30 of the repealed Income-tax Act, 1922 and the Indian Income Tax Act, 1961 with result that the Indian High Courts in order to provide a right of appeal to the assessees had to hold that in order to exercise the right of appeal an assessee has to deny his liability to be assessed under the Act and initially the view of those High Courts which were in favour of the right of appeal to an assessee was also that the quantum of tax cannot be challenged as no such provision was there in section 30 of the repealed Income-tax Act, 1922 and section 246(c) of the Indian Income Tax Act, 1961.

44. The upshot of the above discussion is that with the promulgation of section 129 of the Income Tax Ordinance, 1979 the assessee has the right to file an appeal against all and every part of the assessment order without any reservations and conditions and if an order under section 87 is treated as part of the assessment order it automatically becomes appealable. We have shown above that an order under section 87 is actually a part of the assessment order and thus it becomes appealable if it is made alongwith the main assessment order. The question if the order is not made at the time of main assessment order shall be examined by us presently.

45. Now we proceed to examine if an order under section 87 is not made at the time of assessment whether it could be made subsequently and if so whether it will be treated as an independent order under section 87 itself or it will be treated as an order under section 156 by way of rectification of the mistake. The subsequent three questions shall also be considered alongwith this issue. After coming to the conclusion that the payment of advance tax under section 53 and the levy of additional tax under section 87 is a part of the process of assessment we find no difficulty m holding that although the issue related to levy of additional tax under section 87 should be decided at the time of making the assessment order but if at that stage such order is not made it will be deemed to be a mistake apparent on record and such order can be made subsequently by recourse to the provisions contained in section 156 of the Income Tax Ordinance, 1979 by way of rectification of mistake. As we have held that notwithstanding the repeal of income-tax Act, 1922 and promulgation of Income Tax Ordinance, 1979 -the requirement of law is that the additional tax on account of default in payment of advance tax be made at the time of completion of assessment, therefore, the judgments from the Indian jurisdiction on the point that subsequent order should be treated as mistake apparent on record still holds-the field. It has been held by Madras High Court in the case of V.N.S. Sockalingam Chettiar and others v. I.T.O. (1959) 36 ITR 451 that if no additional tax is levied under section 18-A (8) of the Income-tax Act, 1922 and it has not been added to the tax determined on the basis of regular assessment such omission is a mistake and section 35 of the Income-tax Act applies and mistake can be rectified under that section. It was further held that the requirement of law is that the mistake should be apparent in the record and it is not necessary that it should be in the assessment as such. It was held by the Bombay High Court in the case of Lata Mangeshkar v. Union of India and others that where no penal interest was charged on non-payment of advance tax in the regular assessment it could be rectified subsequently as a mistake apparent from the record by recourse to section 35 of the Income-tax Act, 1922. It has been held by Supreme Court of India in the case of I.T.O. Alwaye v. Asoka Textiles Limited (1961) 3 Tax 303 that if assessing officer omitted to levy penal tax under section 18-A of the Income-tax Act, 1922, mistake can be rectified under section 35 of the said Act.

46. After coming to the conclusion that any subsequent order of the assessing officer, after the completion of assessment, levying additional tax under section 87 is to be treated as an order under section 156 we need not to dilate on the point if such order is appealable or not because now under the Income Tax Ordinance, 1979 a specific right of appeal has been conferred against an order under section 156.

47. We would like to examine another plea raised on behalf of the department that since no specific right of appeal has been given by the legislature against an order under section 87, therefore, the right of appeal against such order is not available to an assessee. It would be appropriate to recall here that under the Income Tax Act, 1922 the order of rectification under section 35 was not specifically appealable and there are several judgments from the Indian jurisdiction that an order under section 35 is not appealable because the right of appeal is not an inherent right. It has to be conferred specifically under the law and the legislature has not conferred any such right on the assessee. However, more enlightened and a liberal view was taken by the superior Courts in Pakistan. The issue came for consideration before Dacca High Court in the case of Inland Navigation Co. Ltd. v. I.T.O. (1967) 16 Tax

1. After examining the relevant provisions of law it was observed by Justice Salahuddin Ahmed as follows: "On a consideration of the different provisions of law, quoted above, we have come to the conclusion that the order of assessment made under section 23 does not cease to be an order under that section merely because it has undergone a change by way of rectification due to some mistake apparent from the record of assessment. The original order of assessment, which is substituted, by rectified order made under section 35 of the Act continues to be an order under section 23 so as to attract to it the provisions of section 30 or 33 which provides for an appeal. We are supported in our view by a decision of the Privy Council reported in 65 I.A. page 236 (C.I.T. Bombay Presidency and Aden v. Khemchand Ramdas)."

48. It was further observed that: "An I.T.O. wishing to make his order non-appealable may commit a mistake apparent from the record and thereby rob the assessee of his right of appeal. The position is wholly untenable. We are therefore, clearly of the opinion that an assessee is entitled to appeal under section 30 or section 33, as the case may be, from an order of assessment that has undergone a rectification under section 35."

49. In the same judgment Justice Abdul Hakim Khan cited the following observation of Chagla, C.J. in the case of Shantilal Rawji 34 ITR 439: "Rectification proceedings are not intended for making an order which by the income Tax Officer in the original assessment could have been challenged, in appeal. the legislature did not intend that the rectification order should act to the prejudice of the assessee in this sense that he should be deprived of a right of appeal by resorting to rectification proceedings because a particular order was not made in the original assessment."

50. The Hon'ble Judge further observed that there is no dispute that an appeal still lies against an order of re-assessment, or assessment under section 34 of the Act though this section is not mentioned in section 30 which is the provision for an appeal. .

51. The issue again came for consideration before Karachi High Court in the case of Hasan Ali Karabhai v. C.I.T. PLD 1974 Kar.

473. It was held by Justice Noorul Arfeen as follows: "Notwithstanding that no specific appeal is provided in section 30(1) of the Income Tax Act, 1922 against an order under section 35 but such appeal lies as an order under section 35 in effect partakes the character of fresh assessment order and is referable to section 23 of the Income Tax Act, and, therefore, such an order being in the nature of an order of assessment would be appealable under section 30(1) of the Act to the A.A.C.".

52. In a recent case it has been held by Karachi High Court in the case of C.I.T. Central Zone-B v. Esso Pak, Fertilizer Limited (1990) PTD 787 as follows: "The argument is that under section 30 of the Income Tax Act no appeal lay in respect of an order passed under section 18(7). It is correct that in section 30 no appeal is expressly provided against action taken under section

87. However, under the provision last referred, the remitter is deemed to be an assessee in default. Under section 30(1) of the Income Tax Act an appeal is generally provided to a person" "denying his liability to be assessed under this Act." It appears that these words contemplate a broad category of persons and also cover the case of an assessee in default, if he disputes liability. We are, therefore, of the view that an appeal did lie and was properly taken and thus there was no bar for the Tribunal to adjudicate upon the ultimate appeal taken to it."

53. In view of above three judgments and particularly the last judgment by his Lordship Mr. Justice Wajihuddin there is no room for any argument that assessee has no right of appeal against an order under section 87 because said section is not specifically mentioned in section 129 conferring the right of appeal on an assessee. It has been held in number of judgments by this Tribunal and the superior Courts that the right of appeal is a valuable right and by now it stands established that it is not merely a procedural right but it is substantive right as well and, therefore, we are of the considered opinion that when the department also concedes that the right of appeal is available to an assessee if additional tax is levied under section 87 when such an order is made with the main assessment order, it cannot be left at the discretion or volition of an assessing officer to provide this right to an assessee or deny the same by making a separate order under section

87. The main plank of argument against the right of appeal has been that under section 129 no such right has been conferred. We are of the opinion that in view .of Circular No.4 of 1979, dated August 23, 1979 by the C.B.R., this argument should not be available to the department. Circular No.4 of 1979 by the C.B.R. is reproduced below: "The provisions of the new secti6n are similar to those of old section

30. However, the following orders of the Income Tax Officers have also been made appealable. (1) Refusal to allow refund under section 98 or 99. (2) Levy of penalty on liquidator under section 114. (3) Levy of penalty for obstruction under section 115. (4) Levy of penalty for failure to give evidence under section 148. (5) Treating a resident as agent of a non-resident under section 78. (6) An order under section 156 rectifying the mistake apparent from record in the order enhances the tax or reduces the refund. It may be pertinent to point out that orders involving provisions of section 84 (sections 44-E and 44-F of the repealed Act) are still appealable as these are. part of order under section 62 or 63 which is appealable."

54. A perusal of the above circular shows that even the C.B.R. is of the view that merely because a particular section is not mentioned in section 129 it would not be sufficient per se to deprive an assessee from the right of appeal if a particular order actually falls within the purview of another order which is appealable. If the C.B.R. is of the view that an order under section 84 though not mentioned in section 129 is still appealable being a part of order under section 62 or 63 there is no reason why an order under section 87 should not be appealable which is part of the assessment order whether made at the time of completion of assessment or otherwise after the completion of assessment by way of rectification.

55. For the foregoing reasons our reply to the question whether an order under section 87 is appealable under any circumstances is in afformative.

56. In view of above discussion dealing with all the aspects of the question referred to us we need not to discuss other aspects of the arguments raised on behalf of the learned representatives for the parties. However, before parting with this order we would like to refer to two judgments. First by the Hon'ble Sindh High Court reported as 1985 PTD 324 and secondly to the judgment of Hon'ble Supreme Court of Pakistan reported as (1991) PTD

663. In both the above judgments the provisions for consideration before the Hon'ble Sindh High Court and Hon'ble Supreme Court of Pakistan were the provisions as contained in Income-tax At, 1922. We have demonstrated by referring to the various provisions contained in the Income Tax Ordinance, 1979 that the law has undergone change and under the law as it exists now an appeal lies against order under section

87. Thus any concession made on behalf of the learned counsel for department in the context of provisions contained in the repealed Income-tax Act, 1922 has no bearing on the law as it stands after the promulgation of Income Tax Ordinance, 1979 which is holding the field.

57. Since this Larger Bench was constituted to consider the limited point of appeal ability of the order under section 87, therefore, after replying the same in affirmative we direct that all the appeals may be fixed before the Division Benches of this Tribunal disposed on their merits. (Sd.) (Sd.) (MUHAMMAD MUJIBULLAH SIDDIQUI), (ABDUL MALIK) CHAIRMAN ACCOUNTANT MEMBER (Sd.) (Sd.) (TAHSEEN AHMED BICAITI) (S.M. SIBTAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER. (Sd.) (ASAD ARIF) ACCOUNTANT MEMBER M.B.A./142/T Order accordingly.