2005 PLP (Trib (PTD)

"(1) The execution of contracts relating to DATA Acquisition are covered within the meaning of contract for construction, assembly or like projects and tax authorities have also confirmed that contract receipts of the assessee are covered under section 80C of the repealed Ordinance. (2) The basis adopted by the learned DCIT to reject the statement filed under section 143B of the repealed Ordinance is not correct and against the provisions of the law. (3) The notice issued under section 56 of the repealed Ordinance was against the provisions of law and accordingly, assessment finalized under section 63 of the repealed Ordinance, in pursuance thereto, was ab initio void and was not maintainable. (4) The applicability of net profit rate of 35 % of the gross receipts is without any basis/justification as confirmed by the Honorable ITAT. Accordingly, the second opportunity provided to the learned DCIT to re‑examine the applicability of net profit rate is not maintainable." As observed by us in the order passed on 20‑1‑2004, any confirmation of the rate of tax withholdings applicable to the assessee whether made by the C.B.R. or an IAC, does not bestow any legal rights or entitled the assessee to be assessed under the Presumptive Tax Regime, unless it also otherwise qualifies to be so treated under the law. Judicial interpretation of law is, in any case, beyond the lawful competence of the C.B.R.

2. As regards the basis of rejection of statements under section 143B, or the validity of notices under section 56 and the assessments framed by the Assessing Officer under section 63 of the repealed Ordinance, the issues cannot be agitated or reviewed in rectification proceedings.

3. The assessee's reference to the provision of opportunity to re examine the applicability of net profit etc., and its maintainability was not dilated upon by the learned AR. It remains unsubstantiated and therefore, rejected.

4. On the date of hearing, .the learned AR made detailed submissions stating that the failure to file an option in terms of clause (913) of Part‑IV of the Second Schedule to the Income Tax Ordinance, 1979 (hereinafter referred as the repealed Ordinance) was not a fatal omission. On the other hand, he complained that the Tribunal had taken an adverse view of this omission and decided the case against the assessee. 'He further contended that the option in question was to be exercised at the time of filing a return bf income under section 55 of the Repealed Ordinance. On the other hand, the assessee was never required under the law to file such a return under section 55 ibid. Hence assessee had no occasion to file the option in question. Relying on a case reported as 2000 PTD (Trib.) 2853 wherein clause (9B) of Part‑IV of the Second Schedule had been examined, it was observed by the Tribunal that Part IV gave a concession and did not impose a burden on the assessee. Further, he maintained that section 80C was a non‑obstantive provision of law which could not be overridden by Part‑IV, of the Second Schedule. In this connection, he relied on a case reported as 1999 PTD (Trib.) 2289. Reliance was also placed on I.T.A. No. 4095/LB of 1994 for the assessment year 1991‑92 decided on 28‑12‑2001. It was pointed out by him that in that case, no option had been filed with the return under section

55. The Tribunal had held that the despite such failure, the assessee could not be deprived of its claim to opt out of the Presumptive Tax Regime. The learned AR stressed upon the argument that proviso to clause (9A) of Part IV could not take away the assessee's right to be assessed under section SOC of the Repealed Ordinance. In the circumstances, it was his opinion that the said proviso needed to be struck down.

5. Arguing his case for the assessment year 1999‑2000, the learned AR pointed out that the proceedings in that case had been initiated by issuing notice under section 56 of the Repealed Ordinance. For past years, a notice under section 56 could not validly be issued, he contended. Reliance in this regard was placed by him on a case reported as 1998 PTD (Trib.) 1250. Reiterating his contention to the effect that failure to file an option in terms of the proviso to clause referred to above was not fatal, he maintained that the assessee could not be crucified at the altar of technicalities.

6. The learned DR on his turn opposed the miscellaneous applications. He denied that the assessee was being crucified at the altar of technicalities. It was the substantive law that was applied in the case of the assessee as section 80C needed to be read with clause (9A) of Part‑IV of the Second Schedule to the Repealed Ordinance, he pointed out. He further stated that the AR had failed to identify any mistake floating on the face of record and the points raised by him do not justify any rectification as the Tribunal's order contained no mistake apparent on the face of the record. Accordingly, he urged that both miscellaneous applications merited to be rejected.

7. Parties have been heard and relevant case‑law quoted by .the learned AR has been carefully examined. Evidently, the case reported as (2002) 86 Tax 231 (H.C. Lah.) relied upon by the learned AR is not attracted to the facts of the present case. The point at issue in that case was whether the assessee who had filed an option under the law for an earlier year, was required to file an option every year instead of being under obligation to file the said option only once in three years? In the present case the assessee admittedly never filed an option at all. As such the cited case is not applicable to the present case.

8. The case reported as 2000 PTD (Trib.) 2853 holds that the provisions of clause (9B) of Part‑IV of the Second Schedule should be interpreted as a concession and not charging or over‑bearing. This finding was recorded in a case of divided opinion of the Members of a DB, in the context of the findings of the learned AM who was of the opinion that the purpose of insertion of clause (9B) appeared to be to tax the imported goods which had already been taxed under section 50(5) read with section 80C of the Repealed Ordinance, to suffer tax withholding once again when goods so imported were supplied to its customers. Differing with this view, the third Member appointed to resolve the situation, held that the purpose of clause (9B) was to provide a concession and not to impose an extra charge. The majority opinion thus prevailed. Seen in this context, this case is again of no help to the assessee as no double jeopardy is alleged to have been caused by the operation of the provisions of the relevant clause. The provisions of clause (9A) appear merely to provide a mechanism to be followed for the purposes of invoking the provisions of section 80C of the Repealed Ordinance. It has not been shown that the assessee was in any way exposed thereby to an extra charge of tax at two different stages on the same income. The case is therefore, of no help to the assessee.

9. The case reported as 1999 PTD (Trib.) 2289 on which reliance has been placed by the assessee, has also been examined. We find that the issues discussed in that case were whether a return filed under any other section than section 55 would also qualify to be treated at par with a return filed under section 55 ibid. It was held in that case that returns filed under sections 56, 57, 65, 72, 81 and 99 etc., were equally valid as was a return under section

55. If the assessee failed to file an option with the return (under section 55) such failure cannot be considered as fatal to his claim of opting out of the Presumptive Tax' Regime. As observed by us in the foregoing paras. the present assessee never filed any option at all. As such it is not a case of omission to file such an option in a particular year which could be condoned in terms of the case now cited by the learned AR. The case referred to by the assessee is of no help in the facts of its own case.

10. As regards the reliance placed on an un‑reported decision of the Tribunal in I.T.A. No. 4095/LB of 1994 for the assessment year 1991‑92, the decision of the Tribunal in that case refers to an issue whether failure on the part of the assessee to file the option on the due date for filing of return of income under section 55 was fatal to his claim for opting out of the Presumptive Tax Regime. It was held that such failure was not fatal and the assessee could not be deprived of its claim to opt out from the Presumptive Tax Regime. Once again this is a distinguishable situation where the assessee in the cited case had filed the option but on a date subsequent to the filing of the return of income under section

55. No such situation is true in the case of the present assessee. As such, the ratio enunciated in the Tribunal's unreported case is also not attracted to the facts of the present case.

11. The argument raised before us that the option in question was to be exercised at the time of 'filing a return under section 55 of the Repealed Ordinance while the assessee never had to file such a return and could not, therefore, file the said option, is fallacious. The provisions of clause (9A) of the Repealed Ordinance made no mention of the filing of a return under section 55 nor link the filing of the option now under discussion with the filing of a return of income. In fact, the relevant proviso to clause (9A) clearly states that a declaration of option is to be furnished in writing within three months of the commencement of the income year. This being so, the argument of the learned AR has no weight and is accordingly to be rejected.

12. As regards the objection raised by the learned AR that Part‑IV of the Second Schedule to the Repealed Ordinance could not override the non obstantive provisions of section 80C thereof, we find no merit in this argument as there is no clash between the two provisions. The proviso to clause (9A) merely sets out the timing and procedure to be followed for invoking or availing the provisions of section 80C of the Repealed Ordinance. Failure to comply with these provisions does not negate the validity of section 80C of the Ordinance itself. As such, it is wrong to suggest that clause (9A) was contradictory to section 80C of the Repealed Ordinance and should therefore be struck down. In any case, no provisions of taw can be held ultra vires by this Tribunal.

13. We also do not subscribe to the view that the assessee was being crucified at the altar of technicalities as no such, crucification appears to have been made. The assessee's contention that a notice under section 56 of Repealed Ordinance could not be issued for past years for which reliance has been placed on a case reported as 1998 PTD (Trib.) 1250 has also been given due consideration. The Honourable High Court's subsequent decision reported as (2001) PTD 998 over rules the earlier decision of the Tribunal and holds that a notice under section 56 of the Ordinance can be issued for current as well as any previous assessment year falling after the enactment of the Income Tax Ordinance, 1979. It has further been held that where an assessee had failed to file a return of total income in the current as well as in a previous year, the issuance of a notice under section 65 of the Repealed Ordinance was not required. The plea taken by the assessee is dismissed for being contrary to the law enunciated by the honourable High Court.

14. As a result of the foregoing discussion, we find that the arguments raised and the issues now raised by the assessee do not qualify for rectification under section 221 of the Income Tax Ordinance, 2001 as no floating error on the face of the record has been identified. On the other hand, it is trite law that Tribunal cannot review or otherwise sit in judgment over its own orders, in the garb of rectification. The two applications of the assessee, therefore, stand rejected. C.M.A./321/Tax (Trib.) Applications rejected.