2012 PLP (Trib (PTD)

The appeal has been filed by the taxpayer with the following main ground, among others:-- "That the said learned CIR(A) was not at all justified in upholding the action of the DCIR who amended the assessment which was barred by time which in view of the facts and circumstances of the case is illegal and void ab initio". Brief facts of the case are that order under section 122(1) of the Income Tax Ordinance,' 2001 was passed on. 30th June, 2010 consequent upon selection of the case for audit under section 177(4) of the Ordinance by the Commissioner and intimated the taxpayer accordingly vide order dated 5-1-2009. Notice under section 122(9) of the Ordinance was issued on 13-5-2010 which was duly responded by the taxpayer with the contention that deemed assessment in the case stood made on the date of filing of return (29th September, 2004) and as per law prevailing at that point of time, amended assessment could only be made within five years i.e. upto 29th September, 2009 and that amendment brought to subsection (2) of section 122 of the Ordinance by Finance Act, 2009, whereby limitation was extended upto the expiry of five years from the end of the financial year in which the Commissioner has issued the assessment order to the taxpayer would not be applicable in the case. This contention of the taxpayers, however, did not find favour with the Assessing Officer who held that the amendment was applicable retrospectively, it did not bring about change in any substantial provision as this change has not increased tax liabilities, the tax has not been charged in respect of the tax years barred by limitation and that the amendment has been made in procedural/machinery provision with in period of limitation envisaged therein, hence it has retrospective application etc. Appeal against this treatment before the Commissioner (Appeals) also failed as per following observation on the point:-- "As regard the time limitation in respect of tax year 2004, I am in complete agreement with the learned Taxation Officer that the amended assessment order is not barred by time. The arguments given by him in this regard in the impugned order are valid. Subsection (2) of section 122 was substituted by the Finance Act, 2009. A comparison of the present provisions of sub-section (2) and the provisions of substituted, reveals that there is no change in any substantive provision of law. The provisions of subsection (2) being not a change in substantive provision of law would apply retrospectively, reliance is placed on the judgments of the appellate Tribunal and Sindh High Court referred to above. In this case assessment stood completed on 29-10-2004 in terms of section 120, when the return was filed. Audit proceedings were pending, in this case at the time when subsection (2) of section 122 was inserted. The period of five years will start from the end of financial year 2005 i.e. 30-6-2005 as per the provisions of subsection (2). The impugned order has thus been passed within the time limit of five years. The objection of the AR is therefore not found valid and is accordingly rejected." Parties have been heard and record perused. While the DR defended the impugned order for the reasons stated therein, the learned AR vehemently questioned the same on the following authorities, among others: -- (i) In the case of Zakaria H.A. Sattar Bilwani v. IACWT/Range-II, Karachi, decided on 1-7-2002 by Supreme Court of Pakistan and reported as '2003 PTD, 52 it was held as under:-- "It is well-settled principle of interpretation of statute that where a statue effects a substantive right, it operates prospectively unless by express enactment or necessary intendment' retrospective operation has been given. Muhammad Ishaq v. State PLD 1995 SC (Pak.) 256 and State v. Muhammad Jamil, PLD 1965 SC

681. This principle was affirmed in Abdul Rehman v. Settlement Commissioner (PLD . 1966 SC 362). However, Statute, which is procedural in nature, operates retrospectively unless it affects an existing right on the date of promulgation or causes injustice or prejudice to a substantive right". (ii) In the case of Nagina Silk Mill v. ITO decided on 2-5-1963 by Supreme Court of Pakistan and reported as 1963 PTD 633, it was held as under:-- "The courts must lean against giving a statute retrospective operation on the presumption that the Legislature does not intend what is unjust. It is chiefly where the enactment would prejudicially affect vested rights, or the legality of past transactions, or impair existing contractors, that the rule in question prevails. Reference may be made in this connection to page 206 of Maxwell on the interpretation of statutes, Eleventh Edition. Even if two interpretations are equally possible, the one that saves vested right would be adopted in the interest of justice, specially where we are dealing with a taxing statute". Perusal of Act No.1 of 2009 whereby the amendment under reference was brought about states that "it shell, unless otherwise provided, come into force on the 1st July, 2009". Further, no intention whatsoever is found to suggest that the amendment will be applicable retrospectively i.e. to acts committed, rights and liabilities accrued before 1st July, 2009. Section 6(c) of the General Clause Act states that: "Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not: (a)______________________________ (b) _____________________________ (c) "Affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed". Rule of construction/interpretation about prospective operation also suggests as under:-- "Statutes are presumed to be only prospective in their operation, according to the authorities on the question, rather than retrospective or retroactive, unless the contrary clearly appears, or is very clearly, plainly and unequivocally expressed or necessarily implied. Under the presumption that a statute, is intended to apply alike and equally to all persons unless the contrary clearly appears, a statute cannot be retroactive as to some persons and prospective as to others unless the Legislature has indicated a manifest intention that it should be so." In view of the above discussion, factual and legal position, it will be found that a right of amendment of assessment of the case upto 29th September, 2009 had accrued to the appellant consequent upon filing of return/deemed assessment on 29-9-2004 as per the law then prevailing. The Department could, therefore, complete the amendment upto the above date only. As against this position, proceedings for amendment of assessment under section 122 of the Ordinance were initiated on 13th May, 2010 by issuance of notice under section 122(9) i.e. after lapse of the above stated limitation period and as such the proceedings could not be said to be even pending on the promulgation of the Finance Act, 2009 i.e. on 1-7-2009. In view of the foregoing, we have no hesitation to hold that the impugned amendment order is barred by time and therefore, void ab initio. In consequence the appeal is accepted. CMA/148/Tax(Trib.)??????????????????????????????????????????????????????????????????????????? Appeal accepted.