2012 PLP (Trib (PTD)

CH. MUNIR SADIQ (JUDICIAL MEMBER).

This order shall dispose of the titled appeal filed by the department against the impugned order dated 30-3-2011 passed by learned Commissioner Inland Revenue (Appeals-Ill), Islamabad.

2. Brief facts of the case are that the provisional assessment order was made under section 122(c) of the Income Tax Ordinance, 2001 by the learned Inland Revenue Officer on 11-5-2010. The taxpayer filed an appeal before the learned Commissioner (Appeals) who was pleased to annul the order passed by Inland Revenue Officer hence this appeal.

3. Arguments heard. Record perused.

4. The first question requiring answer is whether order passed under section 122(c) is appeal able before CIR(A) keeping in view the provisions of section 127 of the Income Tax Ordinance, 2001. In order to properly appreciate the matter section, 127 of the income Tax Ordinance, 2001 is reproduced below:-- "

127. Appeal to the Commissioner (Appeals).

(1)Any person dissatisfied with any order passed by a Commissioner or a taxation officer under sections 121, 122, 143, 144, [162], 170, 182, 183, 184, 185, 186, 187, 188 or 189 or an order under subsection (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of subsection (3) of section 172 (declaring) a person to be the representative of a non resident person, or an order under section 221 refusing to rectify the mistake, either' in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person, may prefer an appeal to the Commissioner (Appeals) against The order"?????????

5. Perusal of section 127 reveals that an order having the effect of enhancing the assessment or reducing refund or otherwise increasing the liability of the person is appeal able. I am fortified in my view by the judgment of honourable Sindh High, Court in re" Messrs Pak Saudi Fertilizer Ltd. v. Federation of Pakistan and 4 others" cited as 1999 PTD 4061 wherein the import of the phrase "or otherwise increasing the liability of the person" has been discussed and it was held as under:-- "(8) It is correct that section 129 does not specify section 53, however, the underlined portion of the said section 129 (as above) would read to the effect that "any assessee objecting to an order made by a Deputy Commissioner 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," surely an order under section 53 demanding defaulting payment there under amounts to either enhancing the assessment or reducing the refund or otherwise increasing the liability of the assessee. In particular the omnibus clause in section 129 "or otherwise increasing the liability of the assessee" is of wide import and there is nothing in the context to give it a restrictive interpretation. The term "otherwise" in the said section 129 covers all eventualities of increase of liability and is not necessarily" to be interpreted as ejusdem generis with the preceding clauses. We are fortified to arrive at such conclusion on the basis of the following reference. (9) In the context of income tax we have been able to lay our hands on Hassan Ali Kara Bhai v. CIT, PLD 1974 Kar. 473 wherein Noorul Arfeen, J, writing for the Court, held that notwithstanding that no specific appeal was provided under section 30, of the Income Tax Act, 1922 against an order under -section 35, however, such appeal lay since the order under section 35 partook the character of a fresh assessment order referable to section 23 of the 1922 Act, and therefore such an order being in the nature of an order of assessment was appealable to the Appellate Assistant Commissioner under section 30 of the Act. (10) The above discussion would amply confirm that the omnibus clause in section 129 i.e. "or otherwise increasing the liability of the assessee" covers every possible eventuality where the tax liability or obligation to pay income tax is increased or refunds reduced, making such orders appeal able under section

129. We accordingly hold that the impugned order in this case i.e. the order under section 53 would be appealable under section 129. " Respectfully following the principle of law enunciated by the honorable Sindh High Court the order passed under section 122(c) is held to be appealable under section 127 of the Income Tax Ordinance, 2001 and finding of Learned CIR(A) on this issue is set aside.

6. Now I come to the second question regarding the applicability of the provisions of section 122(c). The revenue is of the view that section 122(c) can be applied retrospectively because it is a machinery provision, procedural in nature and is also a beneficial legislation. On the hand, learned AR is of the view that section 122(c) is a substantive provision which is prospective in nature and can not be applied with retrospective effect. Honourable Sindh Court in case of Honda Shahra-e-Faisal, cited as 2005 PTD 1316 held that provisions of subsection (5A) of section 122 which were inserted by the Finance Act, 2003 dated 17-6-2003 effective from 1-7-2003- were not retrospective in operation and this view was upheld by the honourable Supreme Court of Pakistan in re "CIT v. Elli Lill cited as 2009 SCMR 1279 = 2009 PTD 1392 and it was held that the provisions of section 122 of the Ordinance are prospective in their application and do not apply to the assessment of a year ending on or before 30th June, 2002. It also needs mention that Honourable Sindh High Gout in re "CIT v. Pakistan Tobaco Company limited cited as 1988 PTD 66 has held that law applicable on the first day of assessment order will apply and not the one in existence during the next year. In yet another case titled "Rustam F. COWAS JEE and others v. C.B.R. and 2 others cited as 1985 PTD

529. Honourable High Court has held that for the purpose of assessment of income, the law applicable is that in force on the first day of the relevant assessment year. The same learned High Court in re: "Harjina and Company Pakistan limited v. CIT" cited as 1%3 PTD 867 held that rights under existing laws are not to be supposed to have been repealed by implication unless intention becomes clear from language of law. It is a fact that section 122(c) of the Income Tax Ordinance, 2001 was introduced through Amended Finance Ordinance dated 28-10-2009 and clause (A) of subsection (1) of section 121 was also omitted by the same Ordinance. By now it is well established that retrospective operation is not to be given to a statute so as to impair an existing right or obligation. The main and primary rule is that every statutory provision is to be deemed prospective unless by express provision or by necessary intendment it is to have retrospective effect. Therefore, keeping in view the case-law 1 cited above, I am of the view that the taxation officer was not correct in applying section 122(c) retrospectively in the taxpayer's case for the tax year 2008. Therefore, the findings of learned CIR(A) that section 122(c) is not applicable retrospectively, does not suffer from any illegality to warrant any interference.

7. For what has been discussed above the order passed by the learned CIR (A) does not suffer from any factual or legal infirmity therefore, the appeal filed by the revenue is dismissed being devoid of any merits. C.M.A./73/Tax(Trib.)?????????????????????????????????????????????????????????????? Appeal dismissed.