1990 PLP (Trib (PTD)

43‑D. If no deposit of cost is made under Rule 43‑B or Rule 43‑C the Bench may in order to give effect to its order take such steps as it may consider necessary.

44. The Tribunal shall append to the statement documents (which shall be listed) which in its opinion may be required by the High Court at the hearing of the reference.

45. The order on the application shall be communicated to assessee and the Commissioners.

46. Where a requisition is received from the High Court under subsection (2) of section 66 or where the case is referred back under subsection (4) of the said section it shall be dealt with by the Bench referred to in Rule 39 unless otherwise directed by the President.

47. When a copy of the judgment of the High Court is received by the Tribunal under subsection (5) of section 66 it shall to the Bench referred in Rule 39 for such order as may be necessary unless the President direct otherwise. Now it is clear that when the reference applications were filed in case of Setthi Bros., Mian Javed, Gulzar Muhammad and Kohinoor Trading Company (supra) the Income Tax Appellate Tribunal Rules of 1948 did not lay down the condition of riling certified copy in triplicate of the order of the Tribunal out of which the question of law was alleged to have arisen and it was clause (a) of subsection (2) of section 66 of the Act which made it mandatory. However, in 1979 the Act was replaced by the Ordinance and the Income‑tax Appellate Tribunal Rules of 1948 were substituted by the I.TA.T. Rules of 1981.

6. If we peruse the provision of the Income Tax Ordinance we find that section 136 thereof lays down the procedure to be adopted in case of reference application and it is reproduced here in below: "

136. Reference to High Court.‑‑(1) Within ninety days of the date upon which he is served with notice of an order under section 135, the assessee or the Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall, within ninety days of the receipt of such application, draw up a statement of the case. and refer it to the High Court. Explanation.‑‑The period of ninety days within which an application is to be made shall apply notwithstanding that the application relates to assessment year prior to the assessment year beginning on the first day of July, 1979, if such application is made on or after the first day of July,1979. (2) If, on an application made under subsection (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may within one hundred and twenty days from the date on which he is served with notice of the refusal, apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, frame a question of law and the provisions of subsections (4), (5), (6) and (7) shall, so far as may be, apply as they apply to a reference made under subsection (1). (2‑A) If on any application 'made under subsection (1) the Appellate Tribunal rejects it on the ground that it is tune‑barred, the assessee or the Commissioner, as the case may be, may, within three months from the date on which he is served with notice of the rejection, apply to the High Court and the High Court, if it is not satisfied of the correctness of the Appellate Tribunal's decision, may require the Appellate Tribunal to treat the application as made within the time allowed under subsection (1), (3) If the High Court is not satisfied that the statement in a case referred under subsection (1) is sufficient to enable into determine the question raised thereby, the Court may refer the case back to the Appellate Tribunal to make such modifications therein as the Court may direct. (4) When any case has been referred to the High Court under this section, it shall be heard by a Bench of not less than two Judges of the High Court, and in respect of such case the provisions of section 98 of the Code of Civil Procedure, 1908 (V of 19()8) shall, so far as may be, apply notwithstanding anything contained in the Letters Patent applicable to any High Court or in any other law for the time being in force. (5) The High Court upon the hearing of any such case, shall decide the questions of law raised there by and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment under the seal of the Court and the signature of the Registrar to the Appellate Tribunal, which shall pass such orders as are necessary to dispose' of the case conformably to such judgment. (6) Where a reference is made to the High Court under this section, it shall be in the discretion of the Court. (7) Notwithstanding that a reference has been made under this section to the High Court, tax shall, unless the recovery thereof has been stayed by the High Court, be payable in accordance with the assessment made in the case. (8) Section 5 of the Limitation Act, 1908 (IX of 1908) shall apply to an application under subsection (1) or subsection (2). (9) When an application is made under subsection (1) by the assessee, it shall be accompanied by a fee of one hundred rupees." Here, again we find that no provision regarding filing of any copy of the Tribunal's order has been made in the Ordinance. However when we go through the Rules we find that Rule 31 of the Income‑tax Appellate Tribunal Rules of 1981 lays down as under: (31) Documents to accompany an application for reference.‑‑(1) An application for reference under subsection (1) of section 1'36 shall be made: (i) in the prescribed form; (ii) in triplicate; (iii) accompanied by three clear and legible copies each of the Tribunal's orders, Appellate order and the assessment order; (iv) a list of documents along with three copies each which in the opinion of the applicant should form part of the case and a translation in Urdu or English of any such document, where necessary. Thus, it is clear that all the cases coming from Lahore High Court are distinguishable and cannot be taken to be an authority for the proposition that if Rule 12 is violated, the appeal should be dismissed. However this does not appear to be the end of the matter and now we turn to the Rules.

7. The main thrust of the argument of Mr. Abbasi is based on violation of Rule

12. However, I think that for purposes of disposing of the argument of the learned counsel for the respondent Rules 11, and 15 are not only very relevant but on their cumulative effect of reading them together hinges the fate of argument of Mr. Abbasi, they are, therefore, reproduced as under: "

11. Documents to accompany memorandum of appeal.‑‑ (1) Every memorandum of appeal shall be in triplicate and shall be accompanied by two clear and legible copies (one of which shall be certified copy) of the order appealed against and two copies of the order of the I.T.O. along with certificate as provided under rule 12 and in the case of an appeal filed by an assessee, the memorandum of appeal shall also be accompanied by the receipt showing deposit of fee as specified under subsection (5) of section 134. (2) In an appeal under subsection (2) of section 134 the ITO shall append to the memorandum of appeal a certificate‑‑ (i) showing the date of communication of the impugned order to the Commissioner; and (ii) stating that the appeal has been preferred under the directions of the Commissioner. (3) The Tribunal may, in its discretion, accept a memorandum of appeal which is not accompanied by all or any of the documents referred to in this rule.

15. Return of memorandum of appeal etc.‑‑(I) Whereas a memorandum of appeal is not filed in the manner specified here in before, the Registrar or the officer authorised under Rule 7 may return it to the appellant or his authorised representative, if any, to bring it in conformity with the provisions of these rules within such time as he may fix. (2) On representation of memorandum of appeal or its receipt through post, it shall again be endorsed and signed in the manner specified in rule 8. (3) Whereas a memorandum of appeal is not represented or received within the time fixed under sub‑rule (1), or the appellant does not comply with the provisions of that sub‑rule, the Registrar or the authorised officer shall place the memorandum of appeal before the Tribunal for such orders as it may deem fit." However, before proceeding further I would like to reproduce at this juncture Rule 13 of ITAT Rules of 1948 and it was as follows:‑ "

13. The Tribunal may reject a memorandum of appeal, if it is not in the prescribed form or return it for being amended within such time as it may allow. On representation after such amendment the memorandum shall be signed and dated by an officer authorised in this behalf by the Tribunal."

8. Prom perusal of Rule 11 it appears that the‑filing of certificate as provided under Rule 12 has been made obligatory. Rule 12, on the other hand, lays down that before riling an appeal, the appellant shall send a copy of memorandum and grounds of appeal to the respondent by registered post and a certificate to that effect shall be appended with the appeal. Sub‑rule (1) of Rule 15 makes it obligatory on the part of the Registrar or an officer authorised by him to return the appeal if the memorandum of appeal is not filed in the manner specified hereinbefore. Sub‑rule (2) of Rule 15 provides that on re‑submission of the memorandum of appeal it shall be signed in the manner as specified in Rule

8. However, if the memorandum of appeal is either not re‑submitted within prescribed time or the appellant does not comply with the provision of sub‑rule (1), sub‑rule (3) of Rule 15 makes it incumbent on the Registrar or the officer authorised by him to submit the memorandum of appeal before Tribunal for appropriate orders. Thus, from perusal of sub‑rule (1) of Rule 15 it appears that the expression "whereas the memorandum of appeal is not filed in the manner specified hereinbefore" refers to the various rules which deal with the procedure and requirement of filing an appeal including Rule

12. Similarly, from perusal of Rule 12 it appears that when an appeal is filed it becomes the duty of the Registrar or officer authorised by him to ensure that a certificate is riled along with memorandum of appeal to the effect that the copy of memorandum and grounds of appeal has been served on the respondent by registered post. For this purpose the Registrar or officer authorised by him is required to insist not only on a certificate but also on the production of proof that the copy of memorandum and grounds of appeal was served on the respondent by registered post. But there is no provision made either in the Rules or in the Ordinance that the Registrar would be entitled to reject the memorandum of appeal if any of the rules have not been complied with. It is pertinent to note that Rule 13 of I.T.A.T. Rules of 1948 specifically vested the Tribunal with the discretion of rejecting the memorandum of appeal if it was not in the prescribed form. But such provision is conspicuous by its absence in the Rules. On top of it sub‑rule (3) of Rule 11 empowers the Tribunal to accept a memorandum of appeal in its discretion even if it is not accompanied by all or any of the document referred to in its sub‑rule (1). It is for this reason that the Registrar or his officer authorised is required to present memorandum of appeal before the Tribunal for such orders as it may deem fit which of course include the power of accepting the memorandum of appeal under sub‑rule (3) of Rule 11 together with power of rejecting it. In my humble opinion sub‑rule (3) of Rule 15 read with sub‑rule (3) of Rule 11 vests in the Tribunal both powers of accepting the memorandum of appeal or rejecting it in its discretion under the facts and circumstances of each case if it has not complied with the Rules. When a memorandum of appeal is presented in violation of any of the Rules it is not valid presentation and as such, there is no appeal before the Tribunal. However, the moment the Tribunal exercises its discretion for dispensing with any of the requirement of the Rules, the memorandum of appeal is regularised. However, if the Tribunal does not exercise its discretion in favour of the appellant the appeal is non‑est hence could not be decided. The argument of Mr. Mumtaz Shaikh, the learned D.R. that section 134 or 135 did not give the powers to the Tribunal to reject an appeal which was in violation of the Rules overlooks this aspect of the controversy. Section 135 of the Income Tax Ordinance deals with the powers of the Tribunal when it is hearing a regularly and validly instituted appeal. But on the other hand section 134 of the Income Tax Ordinance highlights the discussion made above. Here again if the appeal is within time it is validly instituted appeal but if it is filed after 60 days it is non est but the Tribunal has the power of condoning the delay if the appellant was prevented by sufficient cause from presenting it within prescribed period and the moment the Tribunal exercises its discretion in favour of the appellant by condoning the delay, the appeal assumes the character of a regularly and validly instituted appeal.

9. Now reverting to merits of this appeal is appears that a certificate required under Rule 12 was filed but without any proof that it was served by a registered post. Since it was the duty of the Registrar or the officer authorised by him to return the memorandum of appeal if it was in violation of any of the Rules including Rule 12, it should have been returned back to the appellant so that, as was required under the facts and circumstances of this appeal, the appellant could have sent the memorandum and grounds of appeal to the respondent under registered post before re‑submitting it to the Registrar or his authorised officer. Admittedly, the Registrar or the Authorised Officer did not raise any objection and thus, the department was firstly led to believe that it has not violated Rules and secondly it was deprived of the opportunity of rectifying its mistake. It is pertinent to note that the memorandum and grounds of appeal were filed on 11‑7‑1990 though the order appealed against was communicated on 19‑5‑1990. Thus, the department had eight good days at its disposal to comply with the requirement of serving memorandum and grounds of appeal under registered cover. It was all the more necessary for the Registrar or his authorised officer to return the memorandum for the purpose of sending copies of memorandum and grounds of appeal by registered post, as the department, as had been revealed subsequently, had already served them through its process‑server, and thus had reason to believe that it had complied with the requirement of Rule 12 at least in its officers, if not in letters. I, therefore, keeping into consideration the centuries old'' wisdom which has been crystallised in the cardinal principle of administration of prejudice that nobody should suffer because of the mistake of Court which includes its officers, find no force in submission of Mr. Abbasi. Moreover, I am also very match tempted to observe that I would have liked to exercise my discretion in favour of the department by dispensing with the requirement of Rule 12 that a; copy of memorandum and grounds of appeal must be served on the respondent by registered post for the simple reason that the service of memorandum and grounds of appeal on the respondent through process‑server made him aware of the institution of the appeal and the grounds thereof and thus, no prejudice could be said to have been caused to him. This principle has been enshrined by the: legislature in section 155 of the Income Tax Ordinance and I would have kept it in consideration while exercising my discretion under sub‑rule (3) of Rule

11. After all the Rules are handmaiden of justice and not the masters. They must a&3nce the cause of the justice instead of becoming an instrument of oppression. 10 Before turning to the other aspect of the argument firstly I should like to d6l with the submission of Mr. Mumtaz Sheikh the learned D.R. According to him if we insist on service of copy of memorandum and grounds of appeal by registered post it would be extra‑burden on the respondent because of insufficiency of funds at the disposal of learned Commissioner of Income Tax. I am afraid, I do not subscribe to his point of view. The rule lays down the pre.7sinn of service of notice by registered post to avoid this type of controversy which has arisen in this case. If we dispense with this requirement sometimes it may be because of the paucity of fund that notice would be served by the process serer but sometimes it may be because of slackness on the part of process‑server that it is never served though it may purport to have been served. I am, therefore, finally of the view that this provision must stand. Now as far as the insufficiency of fund is concerned the department would be better advised to approach the C.B.R. who have larger amount to spend at their discretion.

11. During the course of argument I invited the attention of learned counsel for the respondent to so‑called affidavit filed by the appellant. The learned counsel, however, submitted that the Civil Procedure Code was not applicable here the affidavit in strict sense of the word was duly sworn. With due respect to the learned counsel, let me point out that an affidavit is treated as piece of evidence if it is filed on direction of a Court or under some provisions of law. Sinn it is piece of evidence, therefore, it should consist, like all other types of evidence, of either those facts which are within personal knowledge of the' dependent or those facts which have come to his knowledge on information p received from someone or some record. An affidavit, therefore, must specifically mention what a deponent is swearing out of his personal knowledge and what he is dosing on information received from some source. Moreover, an affidavit is a statement made on oath and if a person does not believe in Allah on solemn affirmation. Thus, these universally accepted general principles regarding an affidavit have been incorporated in Order XIX of Civil Procedure Code and even if it is held, that Civil Procedure Code does not apply in terms in the proceedings before this Tribunal yet as the principles of equity, justice and good conscience Order XIX of the Civil Procedure Code (C.P.C.) could be applied. Thus, the decisions of Civil Courts regarding an affidavit in my humble opinion are, applicable with full force in proceeding before us. As held by their Lordships of Indian Supreme Court in AIR 1952 SC 317, where an affidavit is based on personal knowledge and belief the grounds for it should be disclosed. Similarly where the affidavit is based on information received the source of such information should also be disclosed and if an affidavit is based partly on personal knowledge and partly on information the affidavit should specify the particulars which are based on the personal knowledge and which on information received. Moreover, such affidavits are to be necessarily verified on the basis of such information or personal knowledge and should also be properly sworn before an officer authorised to administer oath. Please seen 1986 C L C 1119.

12. Now turning to the affidavit riled by the appellant it appears that it has not been verified on the basis of belief based on either personal knowledge or' information received. Thus, it is not a properly sworn affidavit. Let me point out that it appears to have been solemnly affirmed before Oath Commissioner. However, it is on Stamp Paper of Rs.10. If C.P.C. was not applicable I wonder under what provision of law the appellant took it for swearing before the Oath Commissioner. I am not aware of any provision of the Income Tax Ordinance or the Rules framed there under which lays down any such procedure. Thus the appellant itself has made the Affidavit under some provision of law other than the Income Tax Ordinance or Rules framed there under and thus, if such law could be pressed into service by the appellant why the provision of C.P.C. could not be adopted. I, therefore, find no force in the submission of Mr. Abbasi on this point.

13. Mr. Masood Abbasi, also vehemently argued before me that the signatures purported to have been affixed by the appellant were forged. With due respect to the learned counsel such statement without any evidence cannot be accepted. An alleged forgery is to be proved according to the established procedure. For this purpose there should not only be some admitted signatures for comparison with the disputed signature but sample signatures are also obtained before the presiding officer for same purpose. Moreover, such admitted, disputed and sample signatures are sent to Government handwriting expert appointed for this purpose and his expert opinion should also be obtained in support of it. Moreover, the opponent is also given a chance to meet the case of the complainant and he may examine his own handwriting expert. The Court ' then decides the issue of forgery in context of and with reference to the totality of ` the evidence on record. Since there is nothing on record to uphold the contention of Mr. Abbasi regarding alleged forgery I, therefore, find no substance to it. This plea, therefore, also stands rejected.

14. Now turning to the merits of the departmental appeal Mr. Mumtaz Sheikh the learned D.R. submits that the respondent, an individual deriving his income from manufacturing of plastic tapes filed its return originally under section 59(1) of the Income tax Ordinance declaring income of Rs.21,900 on 19‑1‑1984 and it was accepted on 28‑6‑1988. However subsequently it transpired that in computation of his income the respondent had shown opening stock of Rs.60,000 whereas no closing stock in assessment year 1983‑84 was shown. According to Mr. Mumtaz the respondent explained that Rs.60,000 were nothing but local imports but by typing error they were described as opening stock together with imports of Rs.80,

000. The learned D.R. further submits that subsequently the department realised that if there was any concealment it was in assessment year 1983‑84 hence agreed assessment was arrived at an income of Rs.25,000 in assessment year 1984‑85 and the assessment in assessment year 1983‑84 which was also completed under section 59 (1) was reopened on 20‑9‑

88. The learned D.R. vehemently argues that since the respondent itself had shown opening stock of Rs.60,000 in the assessment year 1984‑85 therefore it concealed its income in assessment year 1983‑84 when it did not disclose any closing stock and consequently the ITO was very much justified in adding Rs.60,000 to his already declared income of Rs.18,

200. The learned D.R. concludes that learned CIT(A) was not justified in annulling the assessment order on absolutely wrong conclusion.

15. Mr. M.A. Abbasi the learned counsel or the other hand has vehemently opposed the submission of Mr. Mumtaz Sheikh. Referring to the assessment order framed in assessment year 1984‑85 the learned counsel for the respondent invited my attention specifically to the following observation contained therein. "Later Mr. Massood Abbasi attended and case was discussed with him and concealment in 1984‑85 is not established. Any how the learned A.R. has agreed to be assessed at total income of Rs. 25,000 which is accepted. Referring to his letter dated 3‑2‑88 addressed by the ITO and the reply of the respondent dated 11‑2‑1988 the learned counsel concludes that the department accepted that there was no concealment in assessment year 1984‑85 as the explanation of the respondent that Rs.60,000 were erroneously described as opening stock whereas they represented local purchases only was found correct. The learned counsel, therefore, concludes that if there was no opening stock in the assessment year 1984‑85 there cannot be any concealment in assessment year 1983‑84 as no question of any closing stock would arise under such circumstances.

16. I have heard both the learned DR. as well as learned counsel for the respondent. I think that if the observation that no concealment was established in assessment year 198.1‑85 is read with letter of the ITO dated 3‑2‑1988 and the reply of the respondent dated 11‑2‑1988 it becomes quite clear that the department has accepted the explanation offered by the respondent that the alleged opening stock was reflecting nothing but local purchases. Thus if this fact has been accepted in the assessment year 1984‑85 the very basis of reopening of the assessment order of 1983 ‑84 stands evaporated and thus the department is left with no legs to stand upon qua their eases that the respondent had concealed the income as he had closing stock of Rs.60,000 which he did not show in his trading account. Under these circumstances I think that the learned CIT(A) has arrived at correct conclusion and his order calls for no interference.

17. The departmental appeal therefore stands rejected on merits. M.B.A./916/T Appeal rejected.