P L D 1969 Karachi 300 (PLP)

(a) Income‑tax Act (XI of 1922), S. 33(I)(a) read with S. 30(I), first proviso‑Proviso first to S. 30(1) applying to order passed by Income‑tax Officer‑Such order, held, appealable under S. 33(l)(a). (b) Appeal Restriction on appeals‑Appeals are provided according to severity of sentence and value of subject‑matter of litigation. (c) Income‑tax Act (XI of 1922), S. 35‑Rectification of mistake‑Income‑lax Officer allowing depreciation on value of building but later presuming that such value also included value of land on which depreciation was not allowable and after issuing notice to assessee rectifying his order by evaluating land separately and excluding its value for purpose of depreciation‑Nothing on record to indicate that land had any independent value apart from superstructure thereon‑Income‑tax Officer, held, did not have any mistake before hint which eras apparent from record. JUDGMENT QADEERUDDIN AHMED, J.‑The Income‑tax Appellate Tribunal has referred the following two questions under sec tion 66(1) of the Income‑tax Act: "(1) Whether the Income‑tax Appellate Tribunal was empowered under section 33 to revise an order under section 35 of the Income‑tax Act? (2) Whether on facts and in the circumstances of the case the Income‑tax Appellate Tribunal was justified to hold that Income‑tax Officer went beyond his jurisdiction while rectifying a bona fide mistake of law under section 35 of the Income‑tax Act?"

2. The facts which form the background of this case are that in the assessment made with reference to year 1955‑59 (supplementary) dated 25th of March 1963, depreciation was allowed on a building which was valued at Rs. 5,12,630 but it was later on felt that land was also included in that property and that on land depreciation could not be allowed; therefore, a notice was issued to the assessee under section 35 of the Income‑tax Act, 1922, whereafter the Income‑tax Officer purported to rectify the order on 28th May 1964 by evaluating the land separately at rupees two lakhs and excluding it from the total price of the building for purposes of depreciation. The assessee went in appeal to the Income‑tax Appellate Tribunal under clause (a) of subsection (1) of section 33 of the Act. The objection of the assessee was upheld by the Tribunal, which took the view that (1) the appeal was competent and that (2) the Income tax Officer "had no jurisdiction to estimate the value of land under section 35 of the Act because it was not a mistake which is apparent on the face of the record."

3. The Department was not satisfied with this view of the Tribunal and applied for the above‑mentioned two questions to be referred to this Court under subsection (I) of section 66 of the Act. The reference has been made accordingly.

4. Taking up the first question, we find that the view of the Tribunal has been criticised by Mr. S. A. Nusrat on the ground that an order made under section 35 of the Income‑tax Act, 1922, cannot be assailed under clause (a) of subsection (1) of section 33 of the Act, unless it is found to be appealable under section 30 of the Act. Clause (a) of subsection (1) of section 33 runs as follows :‑ "33(1) Any assessee objecting to an order passed by‑ (a) an Income‑tax Officer in any case to which tile first proviso to subsection (1) of section 30 applies, (b) (c)* * * * * * * * * * * * may appeal to the Appellate Tribunal within sixty .days ut' the date on which such order is communicated to him." The language of the above provision does not impose tic condition that an order passed by the Income‑tax Officer in a case to which the proviso applies should be otherwise appealable under section 30 in order that an assessee may prefer an appeal against it. An order passed in any case is appealable if the proviso applies to it. But Mr. S. A. Nusrat argued that section 30, it' read by itself, leaves no doubt that the proviso merely changes the forum of appeal and brings about no other change. This indicates, according to counsel, that the proviso is not intended to enlarge the number of appealable orders. Counsel is right in so far as he reads the proviso in section 30, but the context changes in clause (a) of subsection (1) of section

33. There is nothing in it to indicate there is any restriction on preferring appeals from an order where the proviso applies. On the contrary, the provision unambiguously and directly lays down that an assessee is entitled to prefer an appal against ' an order passed by the Income‑tax Officer in any case to which the first proviso to subsection (1) of section 30 applies. In order to understand this provision, we have to analyse its own requirements. As they are clear, we cannot import the other provisions of section 30, which have not been made applicable for purposes of section

33. If an order is passed by an Income‑tax Officer then we have to see whether the first proviso to subsection (1) of section 30 applies to it or not. If it so applies then the irresistible and logical conclusion is that such an order is appealable under clause (a) of subsection (1) of section 33 of the Act.

5. We called upon Mr. S. A. Nusrat to tell us if there was anything in the language of the provision which suggested any ambiguity or uncertainty about the meaning which we have understood from it. Counsel replied that there was none, but an anomalous situation was bound to arise if the obvious meaning was attributed to it. In support of this contention he adopted the reasoning of the Appellate Tribunal employed in I. T. A. No. 758 of 1963‑64 ((1965), 12 Taxation 32). At page 33, the relevant observation is as follows: "True that clause (u) of subsection (1) of section 33 provides for a direct appeal against an order passed by an Income‑tax Officer in any case to which the first proviso to subsection (1) to section 30 applies, but then it must be an order which had been passed under any of the sections specified in section 30 of the Act ; and if we do not so read the said clause (u) there will arise a very anamolous position that whereas an assessee whose income is 2 lakhs or below will have no right of appeal against an order of penal interest while assessees of incomes of more than 2 lakhs will have that right." In other words, the anomaly which will be created, according to counsel, is that in those cases in which the income is two lakhs or less there will be no appeal to the Tribunal but in other cases the orders will be appealable to the Appellate Tribunal. But we think that restriction on appeals with reference to the value of the subject‑matter is nothing new nor is it new that there should be appeals with respect to certain punishments and no appeals with reference to lesser punishments. The provisions of Cr. P. C. and C. P. C. support the view that appeals are provided according to the severity of sentence and according to the value of the subject‑matter of litigation. In this view of the matter, we are not inclined to agree that absence of appeals from assessment orders in which the income is two lakhs or less creates any anomaly.

6. Turning now to the second question, we find that the criticism of Mr. S. A. Nusrat on behalf of the Department is that the requirement of section 35 of the Act is simply that there should be a mistake apparent from the record and if this condition is satisfied then the Income‑tax Officer can proceed to rectify it in a suitable manner. Before examining this contention from the legal point of view, we may mention that in this case the Income‑tax Officer presumed that depreciation was allowed on the value of land when he allowed it on the immovable property, but there was nothing before him to indicate that the land had any independent value apart from the superstructure which stood on it, nor did he know whether the superstructure stood on a free‑hold land or leased land, muchless did he know the nature of the lease. There is such a variety of leases that in some of them leased land can have no value as compared with the free‑hold land. Some of such leases are granted in Cantonment areas. From this point of view the Income‑tax Officer did not have any mistake before him which was apparent from the record. Here we may also point out that according to Mr. Ali Athar, it is a debatable question whether a superstructure which stands on a plot of land can be valued separately from the value of that land or not. This contention of counsel is not without force.

7. Since we do not think that there was any mistake apparent from the record, it is unnecessary to examine the scope of "rectification". We may however, mention that the Income‑tax Officer proceeded to evaluate the land without any material before him and the Tribunal is right in pointing out that there was no jurisdiction for putting the value of land at Rs. two lakhs on it.

8. In conclusion, we answer both the questions in the affirmative. S.Q. Question answered in the affirmative.