2005 PLP (Trib (PTD)

The Controversy now stands resolved in view of Circular No. 14 of 1992, deemed assessment under section 59A is restricted to presumptive income as such not attracted in the present case so as to carry out the additional assessment proceedings under section 65(1)(c), therefore, in no course in the absence of order in writing under section 59A reassessment proceedings could be treated valid besides the assessment has been made on 13‑9‑1999 on the basis of return of total income, so the question of deemed assessment order in section 59A does not arise. It is evident that assessment order in writing finds no place in record as required under section 59A, hence the additional assessment proceedings invoking section 65 of the Income Tax Ordinance, 1979 would be void ab initio contrary to law and possessing no legal consequence and, therefore, to be annulled. In this context, the Lahore High Court has recorded its finding in a case reported as 2003 PTD 1530 which reads as under:‑‑ "In the absence of an assessment order, mere issuance of IT‑30 does not amount to an assessment order which could have possibly been reopened under section 65 (additional assessment of that Ordinance)". It would be more appropriate to record complete verdict laid down to the above judgment: "Irrespective of the retrospective effect, given to sub‑clause (c) added in subsection (1) of section 65 in absence of any change in the provision of section 59A, there may not be any question of deeming the existence of an assessment order under section 59A to enable invocation of provision of section 65 to make an additional assessment; (ii) sub‑clause (c) of section 65(1) is in fact an enabling clause authorizing an Assessing Officer to proceed to make an additional assessment even in those cases where either assessment had actually been framed under section 59A or was deemed to have been assessed; and (iii) this enabling provision remains ineffective till a corresponding deeming provision is actually made in section 59A." The ratio of the above judgment is applicable in case of assessee, whereas the cases cited by the learned counsel for the Department and reported as (1998) 78 Tax 205 (Trib.) is not relevant being in context of self‑assessment scheme, whereas 2003 PTD 1530 contradicts the version of Department.

17. Before parting with issue in question, it is necessary to point out that the ITAT in a case reported as (2004) 89 Tax 533 (Trib.) has held that action under section 65 of the Income Tax Ordinance, 1979 could not be initiated for want of assessment made for such assessment year prior to the issuance of notice under section

65. The Tribunal was pleased to annul the proceedings relying upon the decision of the Hon'ble High Court reported 2001 PTD 1998 and another judgment of the same august Court reported as 2002 PTD

998. The ratio of the order of the Hon'ble judges of the High Court vide para. 18 of the order reported as (2001) 84 Tax 155 (H.C. Lah.) = 2001 PTD 1998 (Muhammad Siddiq v. CIT Zone‑A, Lahore) is hereunder:‑‑ "(18) Accordingly is held that a notice under section 65 of the Ordinance can be issued for the current as well as for any previous assessment year after the enforcement of income Tax Ordinance, 1979. Also that in cases where an assessee had failed to file return of his total income in the current as well as in the previous years the issuance of notice under section 65 of the Income Tax Ordinance, 1979 is not required. Further that the provisions of section 65 of the Ordinance are applicable only in respect of assessment already framed or deemed to have been framed. " (*appears to have wrongly been typed as 65 instead of 56) In the circumstances supra we find sufficient reasons to hold that the additional assessment proceedings in the present circumstances in absence of order in writing of original assessment under section 59A are void ab initio as such of no legal consequence as the Assessing Officer was left with no authority to invoke section 65 of the Ordinance in the present case.

18. The next argument is as regard definite information, which is a legal requirement for invoking section

65. In the present case, the revised return declaring additional income of Rs. 257,900 furnished after completion of assessment has been taken as "definite information" so as to initiate proceedings under section 65 of the Income Tax Ordinance, 1979.

19. The Hon'ble Supreme Court of Pakistan in a case reported as 1993 PTD 1108 has defined the term "definite information" as under: "definite information used in section 65 certainly meant much more than mere material as to cause a reasonable belief or even such evidence which might lead to a definite belief. It was held that unless there is definite direct information and there is no further need to put the said definite information to trail by putting in further supporting material the case cannot be reopened. Similarly, the Supreme Court in another judgment reported as 76 Tax 131 with reference to definite information held that deriving a different conclusion form a given set of facts will not amount to definite information." Keeping in view the case‑law above, we find it necessary to reiterate the facts involving present controversy. Revised return furnished to declare additional income after completion of assessment has been taken as definite information for making reassessment proceedings. Therefore, it is to be seen whether the revised return does constitute definite information. In an application made before the Settlement Commission, the assessee declared additional profit, same was also declared through revised return although not accompanied with computation chart.

20. The Assessing Officer noted that no trading of concentrate has been undertaken by the, assessee, therefore, instead of making trading addition, made an addition invoking section 13(1)(aa) on the mere allegation of payments to a beverage company from unexplained sources as such the basis of reopening is distinct and different from additional assessment finally made. It is worth mentioning that approval was obtained for issuance of notice under section 65 on the basis of alleged definite information viz. additional declared income of. Rs.257,900 from sale of concentrates, however, while making additional 'assessment the basis of reassessment has been totally discarded and addition under section 13(1)(aa) has been made on allegation of payment to the beverage company from unexpected sources. Treatment further shows that the basis of reopening are different from the basis taken for additional assessment finally made. The proposal sent to the IAC for seeking prior approval for issuance of notice under section 65 is sufficient for this respect, in the circumstances, at the time of reopening of assessment, there was no definite information that the payments on account of purchases of concentrate were from unexplained sources. In this context to support our view point, we would like to refer the portion of the order of the learned CIT(A) containing the rebuttal of the written arguments of the assessee, which reads as under:‑‑ (i) The revised return is rightly taken as definite information for reopening the case. The said revised return was invalid since it was filed after the finalization of assessment for the year 1998‑99. (ii) The basis for reopening the case under section 65 was a definite information that an additional income of Rs.257,900 was earned by the assessee. During the course of proceedings, it was found out that there was a huge investment of Rs. 112.25 (M) which is unexpected: It appears that the Department has admitted the situation that during the course of proceedings, it was found that investment is from unexplained sources, whereas at the time of reopening, the definite information was additional income declared in the invalid revised return filed under section 57 when the initial assessment was already complete. On factual side also, there is no controversy to the extent that assessment was reopened on one basis, but while making additional assessment, there evolved new basis altogether different from original/initial basis, which later on dropped. In the circumstances, the reopening would not be valid as no such definite information was available at the time of reassessment, besides it appears that after issuance of impugned notice under section 65 on 27‑10‑2000 the Assessing Officer remained silent up, to 26‑3‑2002 and issued notice under section 61 for first time after about, 17 months on the basis of judgment of Customs, Excise and Sales Tax. Appellate Tribunal, Lahore, showing that he did not possess definite information whatsoever regarding unexplained payment and in the circumstances addition under section 13 is nothing but to support the sales‑tax authorities in their case against the Beverage Company at Faisalabad.

21. In the circumstances supra the ratio of the above judgments is fully applicable in case of assessee as in the invalid revised return, no definite information to this effect was available that payments to Beverage Company are from unexplained sources warranting addition under section 13(1)(aa). Further reliance is placed on a judgment reported as 79 Tax 62 (Trib.) wherein the case was reopened on the basis of receipts from contracts understated in the return and during the reassessment proceedings the initial allegation stated above was dropped and as an alternate a new addition was made which was nothing to do with the basis of reopening proposal initially made. The Tribunal held that "the reopening is not valid". The ratio of this judgment is also applicable to the case of the assessee as in the reopening proposal, the basis of reopening was additional income from trading as against this addition under section 13(1)(aa) has been made, which has nothing to do with the facts taken as basis for reopening. We, therefore, have no hesitation to hold that there was no definite information available with the Assessing Officer.

22. The next issue pertains to service of notice under section 65 of the Income Tax Ordinance, 1979. Both the learned counsels further vehemently argued on the issue of service of notice. It is alleged that notice under section 65 was never served, therefore, being the first jurisdictional notice, all the subsequent proceedings are null, void and of no legal effect.

23. The learned counsel for the assessee urged that the reply of the A.R., dated 1‑4‑2002 cannot be correlated with the service of notice, dated 27‑10‑2000, mere presumption of service of notice is not equivalent to actual service of notice, the department is under legal obligation to prove from the record the proper service of mandatory notice for creating jurisdiction for the purpose of reassessment. In rebuttal it is argued that contention of the taxpayer regarding service of notice is incorrect, notice, dated 27‑10‑2000 was duly replied by the authorized representative of the assessee vide letter, dated 1‑4‑2002 which is itself sufficient evidence of service of notice, whereby assessee availed opportunity to explain its position and advance arguments against the contention of the Department, which goes to prove that taxpayer had been given reasonable adequate opportunity to submit reply explaining its point of views in detail before the finalization of the assessment hence the question of service of notice becomes irrelevant.

24. The learned CIT(A) recorded his verdict with regard to the above contention in the following words:‑‑ "Similarly, the grounds pertaining to validity of service of notice under section 65 by affixture is also not valid. The Circle Inspector has made nothing on the face of the notice that the notice has been served by him through affixture in the presence of two witnesses. Though names of the witnesses are not mentioned yet, it is settled principle that presumption of truth is attached to the official acts and documents. Considering that it is held that the service of notice under section 65 through affixture is valid and accordingly all the subsequent proceedings were after assuming lawful jurisdiction."

25. In order to; arrive at a final conclusion in this context, we would like to refer the entries of the order‑sheet w.e.f. 25‑10‑2000 to 26‑3‑2002. 25‑10‑2000 A letter to the IAC, Range‑I, Zone‑C, for approval to reopen case under section 65 of the Income Tax Ordinance, 1979. 26‑10‑2000 A letter from IAC granting approval for reopening. 27‑10‑2000 Issue notice under section 65 ands letter explaining reopening for compliance by 11‑11‑2000 (Gap of 14 months) 9‑3‑2002 A letter to the DCIT, Circle‑1, Cos, Zone Faisalabad in response to which information received including Customs Tribunal decision placed on record. 26‑3‑2002 Issue notice under section 61 and letter for compliance by 3‑4‑2002.

26. The above diaries/order sheets entries reveal that after the entry, dated 27‑10‑2000 regarding issuance of notice under section 65 there is no order sheet entry thereof, regarding particulars of service viz. (i) Name of serving officer. (ii) Who received tire notice/upon whom the service made. (iii) Mode of service. (iv) Place of service. (v) Date of service. (vi) Reasons of affixation. (vii) Witnesses of/necessity of substitute service and (viii) Witnesses of affixation of notice.

27. It is worth mentioning that in the assessment order at page‑1, it is stated that "notice under section 65, dated 27‑10‑2000 has been served upon the assessee". Whereas the office copy of the notice which finds place in record does not indicate the service upon the assessee on the contrary it bears nothing, dated 3‑11‑1999 recorded by the Circle Inspector "Served by affixture by me in the presence of two witnesses". It appears from the above note, of the Circle Inspector that no notice has been served upon the assessee or any other person competent to receive the notice. Contradiction between the assessment order and note of the process server/inspector, regarding service of notice is fatal, besides on the office copy of the notice or any where else, there is no report of the Notice Server regarding his failure to serve notice through ordinary course of service and order of the Assessing Officer to the Circle Inspector to serve the notice by substitute mode of service (affixture) vide Order V. Rule 20 or Rule 17 of C.P.C. Even otherwise the service by affixture also suffers from vital defects being not in accordance with the relevant provisions of Code of Civil Procedure as well as instructions of the C.B.R.

28. The lack of service of notice under section 65 is also evident from the fact that in response thereof, no return was filed, although the bar of section 154(6) is not applicable. The revised return, dated 1‑11‑1999 filed before issuance of notice on 27‑10‑2000 has already been held by the Assessing Officer as legally invalid, the first reply by the A.R., dated 1‑4‑2002 is in respect of notice under section 61, dated 26‑3‑2002 hence cannot be equated with the compliance of notice under section 65 as contemplated under section 154(6) is restricted to filing of return only and nothing else.

29. The proper service of notice under section 65 which confers, jurisdiction to make additional assessment is mandatory in nature hence mere presumption in this regard cannot be made basis of service, unless the service of notice is not proved in accordance with section 154 of the Income Tax Ordinance, 1979 which provides that a notice may be served on the person either by post or in the manner provided for service of summon under the Code of Civil Procedure, 1908 Rules 17, 19 and 20 of Order V, hence would not be unaccustomed to refer the required provision of law. Rule 17, Procedure when defendant refuses to accept service or cannot be found.‑‑‑Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgement or where the serving officer after using all due and reasonable diligence, cannot find the defendant and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made; the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has, so affixed the copy, the circumstances under which he did so and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed. Rule

19. Examination of serving officer.‑‑‑Where a summon is returned under Rue 17, the Court shall if the return under that rule has not been verified by the affidavit of the serving officer and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings and may make such further inquiry in the matter as it thinks fit. And shall either declare that the summons has been duly or order such service as it thinks fits. Rule

20. Substituted Service.‑‑‑(1) Where the Court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose or avoiding service, or that for any other reason the summons cannot be served in ordinary way, the Court shall order for service of summons by‑ (a) Affixing a copy of the summons at some conspicuous part of the house. If any in which the defendant is known to have last resided or carried on business or personally worded for gain; or The above cited provisions find further support by provisions of the Sindh Civil Court Rules, framed for proper adjudication of the provisions of Civil Procedure Code, 1908 related to service of process/ notice, whereby it has been made obligatory upon process server to serve process in a manner insuring proper and effective service of process, vide Rule 2 the Sindh High Court Rules, relevant rules have been made applicable to all civil Courts, since Income Tax Ordinance, 1979 also provides that a notice may be served in the manner provided under Order V of the Civil Procedure Code, 1908 it would be effective to take benefit of Sindh Court Rules, as provisions of Rule 5 C.P.C. should be read together with Rules, 105 to 111 of the Sindh Civil Court Rules:‑‑ Rule

105. The serving officer shall serve all processes entrusted to him ....after due enquiry as to the identity of the person on whom or the house or property, where the same is to be served. Rule

107. Where the person to be served refuses to sign the acknowledgment, or cannot be found, the serving officer whenever possible before affixing a copy of the summons on the outer door of the house of such person, obtain on the original process, the endorsement by signature or thump impression of at least one respectable person of the locality in support of such fact. Rule 108(1). Every process serving officer shall immediately after completion of any duty connected with any process, record with his own hand upon the original process at the place of execution and in the presence of witnesses (if any) his report specifying the manner of execution or the causes which prevented execution. Such report shall be sworn or affirmed before any Court. Magistrate, Officer or a person empowered under section 139 of the Code to administer the oath to the deponent of an affidavit and shall together with the process, be filed in the record. (2) Process serving officer must invariably note the date, hour and exact place of service of each individual process. Rule

109. If a process is affixed to the outer door of the house, in the absence of the person to be served. The serving officer shall make an affidavit as to be following matters:‑‑ (2) the number of times and the dates and hours at which he went to the house; (3) the attempts made by him to find the person to be served; (4) whether he had any, and what, reason to suppose that such person was within the house or in its neighborhood or endeavoring to evade service; and (5) whether any adult member of the family of the person to be served was residing with him: Rule

110. If a summons to a defendant is affixed to the outer door of a house, the serving officer shall affix therewith a notice that the person so served can upon application to the Court, obtain a copy of the plaint and shall return the plaint to the Court. If the summons has been sent by another Court for service and the defendant does not apply for the said copy before the summons is returned under Rule 112(1), it shall be returned to the said Court alongwith the summons. Rule

111. The Court to which a summons or other process has been sent for service shall make a return within the time fixed for hearing of the case, stating whether service has been effected or not and if not, the reasons for non‑service. In the present case, it is the Inspector and not the process server who served the notice and if the mode of the service accepted by the Assessing Officer, is seen in the light of above provisions of Civil Procedure Code, 1908 and Sindh Civil Court Rules, we will see vital discrepancies as there is no report of the inspector that effective personal service under Rules 10, 12 and 16 is not possible using all due and reasonable diligence, the process server did not find the person to be served and the person to be served refused to sign. There is no evidence that the process server took pains to find out the person and go again and again where he is likely to be present and make enquires about his whereabouts and follow him. The efforts so made should be stated in the report whereas temporary absence of the person does not entitle the affixation of summons. We, therefore, find that the circumstances in which the substituted service was effected are demonstratively false. In this context reliance is placed on case law reported as P 1968 U 639, P 1962 Q 130, 1976 SC 422, P 1962 Q 130, 1979 SCMR 183, P 1967 U 1138 and P 1976 U 1521.

30. Vide Rule 19, Order V of Civil Procedure Code it is mandatory for the Court to record the declaration of a due service whereas no such declaration appears in the order sheet, the Assessing Officer has also not examined the serving officer, besides the report is not supported by an affidavit. In this context, reliance is placed on case law reported as P 1970 D 483, P 1963 Lah. 364 and A 1970 M 271 (F.B.). The officer issuing the notice must further be satisfied that all the requirements of Rule 17 have been complied with and before passing an ex parte order he should record a declaration of due service otherwise service would be liable to set aside. Reliance is placed on case law reported as A 19321 248 and P 1970 D 483.

31. It appears that the mandatory requirement of substituted service under Rules 17 and 20 of Order V of Civil Procedure Code 1908, is also not fulfilled to satisfy the Assessing Officer that there were reasons to believe that the assessee is keeping out of the way for the purpose of avoiding service or that for any other reason, the summons cannot be served in the ordinary way and in that case, the order of the Court should be mandatory for the service of summons by affixing a copy thereof, in some conspicuous place in the Department office and also upon some part of the house in which the assessee is known to have last worked and carried on business. Unfortunately there was no order to affix the summons to effect the substituted service hence validity of the service is shaky and cannot be relied upon P 1972 Page

133. We, for the reasons recorded above, find that no notice under section 65 to have been served.

32. To sum up our discussion, we would prefer to conclude our finding in the following words:‑‑ (a) The assessment order as well as notice under section 62, dated 4‑5‑2002 gives impression that the notice under section 65 was served upon the appellant himself whereas as per office copy of the notice the same was not served upon the appellant in person. (b) Contrary to the impression given in the assessment order, record shows that the notice has been shown to be served by affixture which is a contradiction. (c) There is no order sheet entry indicating that attempts to make service in the ordinary course have failed. (d) There is no order on the order, sheet or in the notice itself directing the Circle Inspector to effect service through affixture. (e) The report of the Inspector is silent regarding the place/premises at which the notice has been affixed. (f) The report of the Inspector does not contain the names and addresses of witnesses who recognized the premises and in whose presence the notice was fixed. (g) The names of the persons before whom assessee refused to receive the notice are missing. (h) The Assessing Officer has not examined the Circle Inspector regarding the veracity of his report of service by affixture. (i) There is no mention in the record/assessment order that a copy of the notice has been affixed in the income‑tax building. (j) No reason appears to direct the Inspector in place of process server to serve the notice.

33. In addition to our above version, we would also relay on two relevant Circulars of CBR in support of our view that no proper service is effected in the present case vide C.B.R. Circular No.20(33) IT‑3/73, dated 5‑5‑1973:‑‑ "(2) Cases are sometimes lost in appeals just because service of notice by affixture is not made strictly according to rules. While ordering service by affixture under Rule 20 of the Code of Civil Procedure; it may be ensured that besides affixing the notice at the last known address of the assessee a copy of the notice is also affixed in a conspicuous place in the income‑tax office and that this fact is mentioned in the order sheet as well as in the assessment order." In the subsequent instructions circulated by C.B.R. Vide Circular No.7(S)S.Asst/96, dated 21‑11‑1996 following directions have been repeated on the subject of service by affixture:‑‑ "It is noteworthy that for upholding the validity of service at appellate stage, it is essential that the order sheet entry should not only indicate the order for making substituted service bur should also record reason for resorting to this mode." In the circumstances the supra we are of the considered opinion that the learned CIT(A) erred in law to uphold the service of notice under section 65 on irrelevant basis and in violation of settled principles laid down in Order V of the Civil Procedure Code, 1908, and, relevant Rules of Sindh High Court Rules, discussed above.

34. The next question would be, whether in the present circumstances, it would be justified to set aside the proceedings carried out invoking section 65 for de novo consideration after issuance of fresh notice under section 65 or to annul the proceedings. In this respect, we would like to refer a judgment of the Supreme Court reported as 1971 SCMR 681 wherein following principle has been laid down:‑‑ "The principle so far as this country is concerned; is accordingly well settled that where notice required to be given by the statute is a mandatory notice, then the failure to comply with such mandatory requirement of the statute would render the act void ab intio as being an act performed in disregard of the provision of the statute: Further more any further action taken on the basis of such void order would also be vitiated and the defect‑at the initial stage would be incurable by a hearing at a subsequent stage.'' Reliance is further placed on the reported judgment cited as 1988 PTD 117, wherein if is held that no notice under sections 61/62 can be issued without service of notice under section 65 and in such circumstances the subsequent notice would be without jurisdiction arid illegal. The relevant extract of the judgment is hereunder:‑‑ "(5) For the application of the provisions of the Ordinance in a case where it is to be reopened, it is the first condition that notice under section 65 must be served on assessee as under subsection (1) of section 65 it has been provided that after the issuance of notice under section 65 "all the provisions of this Ordinance shall, so far as may be apply accordingly". Therefore, unless the notice under section 65 had been served on the assessee, no other notice could be issued to the assessee either under section 58 or, under sections 61 and

62. The learned CIT(A) has rightly pointed out that notice under section 61 could only be issued when either the assessee had furnished its return of, income or upon whom the notice to furnish such return of income has been served. In the present case, neither notice under section 65 for filing the return was served on the assessee nor any return has been filed, by him. Therefore, all the notices issued under section 61 were without jurisdiction and illegal. "

35. In the judgment reported as 1990 PTD 705 following principle has been laid down:‑‑ "(4) We have given our anxious consideration to the submissions of the representatives of the parties. Once the first appellate authority had held that the notice under section 65 of the Ordinance was neither presented to the assessee nor served by affixture the only course available was to cancel the reassessment made under section's 65/62 of the Ordinance. For this conclusion, we are fortified with the principle of law that if the basic foundation is illegal, superstructure base thereon automatically falls to the ground." Whereas the ratio of the judgment reported as 1997 PTD 2065 is applicable on the case of appellant on both the accounts that is validity of service by affixture and consequences thereof. The relevant paras. read under:‑‑ "(3) We have examined respective contention with the assistance of the learned D.R and the learned Authorized Representative. We really fail to find out as to whether the procedure of service of notice under the law was correctly followed? Service of notice by, affixture can be effected only when the Revenue fails to effect service on the person of the individual, failing which on his authorized Representative, failing which on the adult male member of the family usually residing with him. The procedure prescribed for the service of the notice having not been followed, the service of the notice under the circumstances of this case, therefore, does not warrant any sanity. Accordingly, we hold that the service of notice under section 65 of the Income Tax Ordinance, 1979 is defective. The proceedings taken thereafter, in the circumstances, of this case are nullity in the eye of law. (4) It is noticed from the record that the learned first appellate authority did not apply its mind to this vital issue. The impugned order, therefore, cannot be supported. Accordingly, we hold that the observation of the learned CIT(A) in respect of the action under section 65 does not apply the law correctly. The same, therefore, cannot be supported. In view of these reasons, we declared the action under section 65 as coram non judice." Cancellation of additional assessment is warranted as pet aforesaid binding precedent on the subject reported as 1967 PTD 189 (SC), 1971 SCMR 681, 10 Tax 7 (Trib.), 1981 PTD 40, 1987 PTD 355, 1988 PTD 117, 1990 PTD 705, 1995 PTD 1100 and 1997 PTD 2065 on the basis that the notice for assumption of jurisdiction of subsequent proceedings was not properly served in accordance with law. Since there was no due or proper service of basic statutory notice under section 65, therefore, the subsequent proceedings and reassessment order are invalid and without jurisdiction as per ratio of the aforesaid judgments.

36. For the above‑said reasons, we find that there was no proper service of basic statutory notice under section 65, therefore, the subsequent proceedings and the assessment order are invalid being passed in wrongful exercise of jurisdiction. Since we have already observed above that while making initial assessment, Assessing Officer has only issued IT‑30 and demand notice as such, order in writing under section 59A, finds no place in the record and because it was also not deemed assessment envisaged under presumptive tax regime, but actual assessment to there must he an order in writing to proceed with additional assessment proceedings under section 65 hence we hold that in the absence, of assessment order in writing the jurisdiction to frame additional assessment cannot be assumed invoking section 65 of the Income Tax Ordinance, 1979.

37. Record further reveals that the taxpayer filed complaint No.1008L/2002 before the Hon'ble Federal Tax Ombudsman (FTO) who vide his order, dated 23‑11‑2002 held that there was no maladministra tion on the part of the Department. Therefore, the Review Petition No.2 of 2003 was also rejected by the Hon'ble FTO vide order, dated 17‑3‑2003. It is vehemently argued by the learned counsel for the Department that under Article 29 of the Establishment of the office of federal Tax Ombudsman, 2002, there is bar of jurisdiction, hence no appellate forum hold jurisdiction over the representation in cases decided by the Hon'ble Tax Ombudsman.

38. We, however, find that the question of validity of the order of FTO, is not the subject matter of the present appeal, as order of the FTO has not been called in question in the grounds of present appeal even otherwise the present cross‑appeals have been preferred from the order under section 65 and an application under section 156 of the Income Tax Ordinance, 1979 and not from the order of the Hon'ble Federal Tax Ombudsman (FTO). There is difference between exercise of jurisdiction under the Income Tax Ordinance, 1979 read with Income Tax Appellate Tribunal Rules, 1982 and jurisdiction to "question the validity of any action taken, intended to be taken, made or done under the Establishment of the Office of Federal Tax Ombudsman, 2000". In the present circumstances, there appears no bar or any sort of, restriction debarring CIT(A) and Income Tax Appellate Tribunal in exercising appellate jurisdiction, as the powers of, the learned CIT(A) and the Tribunal in exercise of appellate jurisdiction have not been taken away under Article 29 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. Even if, it is observed by the Hon'ble Federal Tax Ombudsman that there was no maladministration, even then the Tribunal is empowered to exercise appellate jurisdiction to conclude its findings as to "whether condition laid down for invoking section 65 and section 13 of the Income Tax Ordinance have been fulfilled and requirements of law have been properly taken care of by the Department".

39. It would be relevant to mention that in Civil Suit No. 178 of 2002 filed before the Hon'ble High Court, there is mention of the order of the FTO in clear terms, even then having complete knowledge, the Hon'ble High Court not only entertained the Civil Suit but also allowed interim relief vide order, dated 21‑2‑2003 restraining the defendants from encashing the savings certificates.

40. The next question raised before us is regarding Civil Suit No. 178 of 2002 filed before the Hon'ble High Court. It is argued that during the pendency of the Civil Suit, the Tribunal cannot adjudicate the controversy involved between the parties. We do not find merit in the argument as the Hon'ble High Court of Sindh vide order, dated 13‑8‑2004 passed in Civil Suit No. 178 of 2002 has directed the Tribunal to dispose of the matter on merits on or before 28‑9‑2004.

41. So for as departmental appeals are concerned, in view of above discussion, we find no merit in preliminary objection of admissibility of appeal, condonation of delay as well as the pendency of Civil Suit in the High Court and decision of Federal Tax Ombudsman in the context of maladministration.

42. As a result of above observations, we are of the view that the action of the learned CIT(A) in the case in hand of setting aside the assessment order for de novo consideration amounted to providing a time to the Assessing Officer to fill in the legal lacuna to the detriment, of the interest of the assessee which cannot be permitted. It was a case of annulment of the, assessment and not a case of setting aside the assessment. Therefore, the impugned order of the learned CIT(A) is modified and the re‑assessment as made by the Assessing Officer deemed stand annulled instead of setting aside. Consequently, the reassessment order passed under section 65 stands cancelled.

43. The appeal bearing ITA No. 1291/KB of 2003 and Departmental appeal bearing ITA No. 1626/KB of 2003 are disposed of to the extent and in the manner indicated above.

44. Consequently, the cross‑appeals arising out of order under section 156 stands dismissed being infructuous. S.A.K./279/Tax (Trib.) Order accordingly.