P L D 1971 Lahore 861 (PLP)

The question of absence or Jurisdiction does not arise in the case. In order to see that there is an absence of jurisdiction it is necessary to establish that the authority or the Court had not been constituted as required by the statute or the person proceeded against was not subject to the jurisdiction of the Court or the authority or the ground of which action is taken was not within the grounds stated by the statute Zafarul Ahsan v. The Republic of Pakistan (P L D 1960 S C 113) and Fazal Din v. Commissioner, Peshawar (P L D 1968 Pesh. 30). It is not the case of the petitioner that the Income‑tax Appellate Tribunal has not been validly constituted or that the petitioner is not subject to its jurisdiction. It is also not the case of the petitioner that it is beyond the competence of the Tribunal to determine whether or not the amount paid to the Preference Shareholders for redeeming their shares is dividend. In fact the petitioner has himself invoked the appellate jurisdiction of the Tribunal to challenge the finding of the Income‑tax Officer on the question.

3. Learned counsel for the petitioner contends that the Tribunal in giving the notice to show cause why the amount should not be included in the taxable income has acted in contravention of the provisions contained in section 33(4)(a) and (d) which provides: --‑ "(4)(a) The Appellate Tribunal shall give both parties to the appeal an opportunity of being heard. (d) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be reduced or annulled, it shall reduce or annul the assessment accordingly." The precise contention of the petitioner is contained in paragraph 17(1) of the petition which reads as :‑ "The only power enjoyed by it under section 33(4)(a) of the Income‑tax Act to increase the assessment is exercisable in case of insufficient assessment which is necessarily co-related to the quantum of income estimate being found lower than it ought to be. The enhancement of income to Correct an alleged error of law and to include sums which may be income by fiction of law could not be resorted to on the ground of insufficiency. Addition of such sums may hardly make the assessment sufficient." We are unable to accept this contention. If the amount which the petitioner has paid to the Preference Shareholders was in fact a dividend within the meaning of section 2(6‑A) and (d) then it should have been added to the income for the purposes of assessment and if it has not been added in computing the amount of tax the case would obviously be one of insufficient assess ment and provisions of section 33 (4) (a) and (d) would be attracted to the case to increase the assessment. The contention that the Tribunal has no jurisdiction to issue the notice is with out force.

4. It is next contended that the respondent has already held in Income‑tax Appeal No. 1933 of 1967‑68 that the amount paid by the Company to the Preference Shareholders for redeeming the shares is a dividend within the meaning of section 2(6‑A) (d) of the Act and is liable to the incident of taxation under the Income‑tax Act and that the Tribunal has given the show‑cause notice only by way of a formality to obviate any legal objection. He contends that any effort on the part of the petitioner to explain his case will be only an attempt in futility. The Tribunal is constituted of responsible persons, and we have no reason or basis to doubt that its members will not apply their mind objectively to the points, which may be raised before them. All persons performing judicial or quasi-judicial functi3ns have to be open to conviction and they feel no difficulty in revising their opinion, which they may have expressed in an earlier decision, whenever a case for that is made out. If, however, the Tribunal maintains its view that the amount so distributed is a dividend within the meaning of section 2(6‑A)(d) and re‑affirms its earlier decision, it will not in any way deprive the petitioner of the remedies which may be available to it under the law. He can apply under section 66(1) to the Tribunal requiring it to refer to the High Court any question of law arising out of which order. The Income‑tax Act provides a complete machinery for assessment of tax and for obtaining relief in respect of any improper or illegal order passed by the Income‑tax Authorities and an assessee cannot, unless the h order impugned, is without jurisdiction or in excess of jurisdiction, invoke the jurisdiction of the High Court under Article 98 of the Constitution when he had adequate remedy open to him under the Act itself. Bashir & Co. v. Income‑tax officer (1968 S C M R 997) and Steel Brothers & Co. Ltd., London v. Central Board of Revenue, Islamabad and others ((1969) 19 Taxation 97 (S C)). It was held in Nagina Dal Factory v. Income‑tax Officer and another (1968 S C M R 1035) that: --‑ "When a statute under which action is taken itself provides remedies, recourse must be had to those remedies first. Direct access to the High Court for relief in writ jurisdiction thus by‑passing the special forums which are created by the special law itself, is not permissible. Article 98, in terms, precludes action under it where another adequate relief is available." The same view was taken in International Body Builders v. Commissioner of Income‑tax (P L D 1971 Lah. 559).

5. It was also contended that the finding of the Tribunal in the earlier case that the "accumulated profits which have been fictionally changed into dividend have to be taxed" is illegal and is based on an erroneous assumption unsupported by any provision of Income‑tax Act; and that the amount which the shareholders received by distribution from the company was capital and not dividend the transaction was not covered by section 2(6‑A)(d) of the Act. The finding is given by the Tribunal in a case in which the petitioner‑company is not a party. The petitioner is not bound by the same and can canvass against it before the Tribunal in reply to the show‑cause notice. The petitioner‑company, as already observed, has already challenged the decision of the Income‑tax Officer holding the amount of Rs. 78,80,500 paid for redeeming preference shares as dividend within the meaning of section 2(6‑A)(d), and has thus accepted jurisdiction of the Appellate Tribunal to decide the question.

6. It was also contended that if the respondent is not restrained from proceeding further in pursuance of the notice, it would enhance its income by Rs. 78,80,500 with a result that the petitioner will immediately have to pay a tax of Rs. 40,00,000; that the Income‑tax Officer will demand interest for the period the amount remained unpaid; that for non‑payment of tax a penalty under section 46(1) of the Act may be imposed; that respondent may attach the ground of property of the petitioner‑company which will injure the reputation of the company and that the respondent Income‑tax Officer may also take steps for realisation of this amount as arrears of land revenue. We cannot on any one of these considerations assume jurisdiction under Article 98 of the Constitution when the petitioner otherwise has not a case for invoking our jurisdiction under Article 98.

7. The petition has no merit. It is accordingly dismissed in limine. K. B. A. Petition dismissed.