2002 PLP 208 (PTD)

Shahbaz Butt for Petitioner. Muhammad Ilyas Khan for Respondents Through the present writ petition the petitioner assailed the issuance of notice, dated 16-5-2001 under section 65 of the Income Tax Ordinance and ultimate re-opening of the assessment of the company for the assessment year 1995-96.

2. Before the issuance of the notice under section 65 of the Income Tax Ordinance, a show-cause notice, dated 17-8-1999 was issued by Assessing Officer to the petitioner stating therein that the scrutiny of the balance-sheet for the assessment year 1995-96 revealed that a proposed dividend of Rs. 45.00,000 was shown on 30-6-1995. Further perusal of the assessment record in the case of Mr. Saqib Elahi and Mr. Saqib Elahi who were Directors of the company revealed that both the Directors have shown dividend income amounting to Rs. 15,00,000 each from the company. It was also observed that the tax on the such dividend was deducted in the year 1995. Thus, this Assessing Officer stated in his notice that this transaction led to the conclusion that the dividend amounting to Rs. 30,00,000 was paid before 30-6-1995 and prima facie it showed that the Company had declared fictitious liability amounting to Rs. 45,00,000.

3. The petitioner submitted his reply and. the explanation on the issue of fictitious liability was found satisfactory and no adverse inference was drawn. Later on receipt of the balance-sheet of the Company as on 30-6-1995 while making assessment of Directors and working out the BUV of the shares, it transpired that the petitioner had adjusted an amount of Rs. 76,10,413 under the head "prior year's adjustment". The Assessing Officer observing this new fact had issued another show-cause notice. Explanation submitted by the petitioner for previous year's tax adjustment at Rs. 55,59,895 was not considered satisfactory. The petitioner was required vide Letter No. 384, dated 6-2-2001, issued by the Assessing Officer to substantiate its claim by producing all books of account or other evidence. The explanation of the petitioner was not found satisfactory in this case and the case of the petitioner for the assessment year 1995-96 was re-opened under section 65 of the Income Tax Ordinance, 1979 with the prior approval of the Assistant Commissioner through Commissioner, Faisalabad. In the back-grounds of these facts, notice under section 65 of the Income Tax Ordinance was issued on 1,6-5-2001 and the assessment for 1995-96 was re-opened.

4. Learned counsel for the petitioner argued that the main business of the company of the petitioner is that of the export and he is assessable under section 80 CC of the Income Tax Ordinance and tax deducted at source in terms of section 50(5A) of the Income Tax Ordinance, 1979 on the export realization is the full and final discharge of its tax liability under the Income-Tax Ordinance. It was further argued that in the case of the petitioner there was no definite information for re-opening of the case. It was also argued that the Department kept on changing its stance and they have re-opened the case of the petitioner through colourable exercise of jurisdiction. Adding to his arguments, the learned counsel submitted that petitioner has no other remedy available, therefore, his writ petition is maintainable. The learned counsel has relied on the cases Edulji Dinshaw Ltd, v. Income Tax Officer (PLD 1990 SC 399 = 1990 PTD 155), Messrs Home Planners v. The Assistant Commissioner of Income Tax, Lahore (2001 PTD 16.33), Baby Own v. Income Tax Officer (.1997 PLT 47), Noorani Cotton Corporation v. Sales Tax, Officer (PLD 1965 SC 161), Nagina Silk Mills, Lyallpur v. The Income Tax Officer, A Ward, Lyallpur and another (PLD 1963 'SC 322).

5. The learned counsel for the respondent raised a preliminary objection about the maintainability of writ petition and argued that Income Tax Ordinance, 1979 is complete code by itself. It provides a complete hierarchy for adjudication of all disputes pertaining to income tax. It was maintained by the learned counsel that Income-tax is a specialized field in the domain of fiscal laws. The Legislature; has, therefore, established judicial hierarchy under Income Tax Ordinance, 1979 to thoroughly examine the pleas of the parties. It was next urged by the learned counsel that the judgment relied by the petitioner may not be much help to the petitioners in view of the latest view of the Supreme Court and in that reliance was placed on cases Messrs Pakistan Tobacco Co. v. Government of Pakistan (1993 SCMR 493), Alahaam Builders (Pvt.) v. Income Tax Appellate Tribunal (1993 SCMR 29), Commissioner of Income-tax v. Private School (1993 SCMR 96). Reference was also made to Pak-Arab Fertilizers v. Deputy Commissioner, Income Tax (2000 PTD 263).

6. I have considered the arguments of the learned counsel far the parties and gone through the record.

7. It is admitted from the record that earlier a show-cause notice was issued to the petitioner relating to the fictitious liability and on the issue of a fictitious liability the explanation of assessee was accepted. Later the question relating to adjustment of an amount of Rs. 76,10,413 under prior year's adjustment was taken note of. The petitioner was confronted and the explanation was not found satisfactory. Thus, the case was re-opened under section 65 of the Income Tax Ordinance. This fact shows that the proceedings against the petitioner did not suffer from any mala fide on the fact of it.

8. Regarding the jurisdiction of this Court under Article 199 of the Constitution of Islamic Republic of Pakistan, neither there is any clog nor there is any fetter placed on it but this jurisdiction is to be regulated B by Court itself in establishing proper rules for administration of justice. Although, there may be the jurisdiction but it is exercised discreetly and with judicious approach. Income Tax Ordinance, 1979 is complete code by itself. The assessment order is passed after providing full opportunity of hearing to the assessee. The order passed by the Assessing Officer is appealable before the Commissioner Income. Tax (Appeals) and the second appeal is competent before the Income Tax Appellate Tribunal. After the decision of the Tribunal, a reference is also competent before a Division Bench of this Court. No doubt, that the Hon'ble Supreme Court was held in various judgments relied upon by the learned counsel for the petitioner that a writ is competent even against a show-cause notice but at the same time, the apex Court has deprecated the tendency of bypassing the remedy provided under the relevant statute and press into service the Constitutional jurisdiction of this Court. Upon re-opening the case of the petitioner, the Assessing Officer would conduct the' proceedings for additional assessment and in that the petitioner would Id have every right to urge and raise any pica whether of law or of fact before hint.

8. Besides above consideration. I am also of the view that where the nature of dispute between the parties falls within the domain of factual controversy, there also remedy through writ petition is not encouraged. Admittedly in the case of the petitioner, there are factual controversy, which would have to be gone into at the departmental level. In the light of the observations hereinabove, I do not see any merit in the writ petition and the same is dismissed in limine. C.M.A./M.A.K./B-52/L Petition dismissed.