2013 PLP 884 (PTD)

SYED MANSOOR ALI SHAH, J.

This reference, as well as, connected references listed in Schedule "A" of this judgment raise identical questions of law and are, therefore, decided through this consolidated judgment.

2. The question of law arising in theses references is as under:-- "Whether OGRA formula constitutes "definite information" for determination of sales and, therefore, deemed assessment order passed under section 120 of the Income Tax Ordinance, 2001 could be amended under section 122(5) of the Income Tax Ordinance, 2001?"

3. Learned counsel for the petitioner submitted that OGRA formula amounts to definite information as it determines the sales made by the assessee. Learned counsel in support of his contention placed reliance on Income Tax Officer and another v. Messrs Chappal Builders (1993 SCMR 1108) and Inspecting Assistant Commissioner and Chairman, Panel 20 Companies and another v. Pakistan Herald Ltd. Through Director, Finance and Corporate Affairs (1997 SCMR 1256).

4. Learned counsel on behalf of the respondent assessee submitted that meaning of "definite information" has come before this Court earlier and placed reliance on E.F.U. General Insurance Ltd. and others v. The Federation of Pakistan and others PLD 1997 SC 700 = 1997 PTD 16931, Inspecting Assistant Commissioner and another v. Pakistan Herald Ltd. (1997 SCMR 1256)2, Income Tax Officer and another v. Chappal Builders (1993 SCMR 1108)3 and Abdul Hamid and others v. Deputy Collector, Excise and Taxation/Income Tax Officer & C.I.T. and others (1988 PTD 324). Relying on the above judgments, learned counsel submitted that definite information means information which is certain and absolute and OGRA Formula does not qualify to be definite information.

5. Arguments heard. Record perused.

6. In order to answer the question of law raised in this reference and before elaborating on the meaning of "definite information" under section 122(5) of the Ordinance it is important to factually assess the nature and character of the OGRA formula which has been used by the Assistant Commissioner, Inland Revenue (Audit-II), Regional Tax Office, Rawalpindi to arrive at the definite information i.e., total sales of the assessee.

7. Admittedly, the department obtained the OGRA Formula from the Oil & Gas Regulatory Authority ("OGRA") under section 1764 of the Ordinance. It is pointed out by the department that the said formula has not been notified or recognized under any law and is an internal formula evolved by OGRA for its own calculations. According to the department, the said formula is used to convert the gas consumed by the assessee in MMBTU5 into Kilograms, which in turn when multiplied with the price of the gas per kilogram gives the total sales made by the assessee as explained below:-- Kg = MMBTU X S.G. X 34473 C.V. In this formula (i) Kg is gas produced in Kilograms. (ii) MMBTU is the unit of energy in which the natural gas is supplied to the CNG stations. (iii) C.V. is the calorific value of the natural gas used in the production of CNG. (iv) S.G. is the specific gravity for the natural gas consumed for production of CNG.

8. The Calorific Value (C.V.) and Specific Gravity (S.G.) of the natural gas used by the CNG Stations are procured under Section 176 of the Ordinance from Sui Northern Gas Pipelines Ltd. (SNGPL) while the gas consumed in MMBTU is collected from Billing Officer of SNGPL, Islamabad from the gas bill of the assessee.

9. After collection of information from OGRA and SNGPL the petitioner department applied the OGRA Formula to calculate the monthly sales of the respondent assessee. Extract of the sales worked out by the department as described in the Amended Assessment Order dated 31-3-2010 are as under:-- CONVERSION OF GAS IN KG TAX YEAR 2005 Month Gas consumed in MMBTU Specific Gravity Calorific Value (CV) Constant of formula Conversion of Gas in KG by formula KG= MMBTU* SG* 34473/CV Per KG sale price for the month Sales in Rs. For the month. Jul-04 11570.82 0.6435 1081 34473 237446.665 25.45 6,043,017.63 Aug-04 5513.62 0.6378 1066 34473 113721.6679 26.99 3,069,347.82

10. The monthly sales in rupees worked out by using the OGRA Formula by the department have been considered to be "definite information" for the purpose of section 122(5) of the Ordinance and on the basis of the same deemed assessment order under section 120 of the Ordinance has been amended.

11. Careful examination of the OGRA Formula shows that only the gas consumption of the assessee in MMBTU appearing in the gas bill is a determined and a conclusive amount, while the rest of the components constituting the OGRA Formula are variables, employed to calculate the total sales of the assessee. The Formula, which does not enjoy the backing of law, simply demonstrates an in-house, self-styled methodology adopted or evolved by the department to arrive at the total sales of the assessee, hence, the said information passes for an opinion or estimate of the department rather than definite information made available to the department through audit or otherwise.

12. The term "definite information" in section 122(5) of the Ordinance is not just any information but definite enough to satisfy the concerned officer that income chargeable to tax of an assessee has escaped assessment or total income of an assessee has been under-assessed, etc6. "Definite" means7 indisputable, known for certain, explicitly precise, clearly defined, leaving nothing to implication, established beyond doubt and cut and dried. Definite information is, therefore, that select information which falls within the restrictive meaning of the word "definite" explained above. The law also provides that definite information must be acquired from audit or otherwise. Applying the interpretative tool/doctrine of ejusdem generis which literally means "of the same kind or class" and the doctrine provides that where general words follow an enumeration of two or more things, they apply only to persons or things of the same general kind or class specifically mentioned8 the word "otherwise" appearing next to the word "audit" in section 122(5) of the Ordinance on the basis of the above doctrine means a methodology akin or similar to audit where some determined, final, certain, indisputable, calculated information is picked up from any available record of the assessee. "Otherwise," therefore, does not mean putting information through further process of calculation by the department. The word "acquired" used in section 122(5) of the Ordinance which literally means to "gain possession of" in the present context connotes that the information already exits and has to be picked up from the records or documents. This acquisition provides no margin for incomplete, imprecise and inexact information to be completed through further calculation or processing as that would not be acquiring information but analyzing it.

13. Reading of section 122(5) of the Ordinance, therefore, shows that information in a definite, final and conclusive form must already exist in some document or record at the time of acquisition. Any information which is incomplete or requires further processing falls outside the domain of definite information and can best pass for a departmental opinion, judgment, guesstimate, approximation or estimate.

14. In the present case the department itself completed the information by working out the total sales by applying the OGRA Formula, which requires feeding of different variables and then arriving at a figure of total sales made by the assessee. This does not constitute "definite information" acquired through audit or otherwise but more so a departmental opinion evolved on the basis of a self-styled formula. Reliance with advantage is placed on Messrs E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others PLD 1997 SC 700 = 1997 PTD 1693, Income Tax Officer and another v. Messrs Chappal Builders (1993 SCMR 1108), Inspecting Assistant Commissioner and Chairman, Panel 20 Companies and another v. Pakistan Herald Ltd. through Director, Finance and Corporate Affairs (1997 SCMR 1256), Messrs Citibank N.A. through Resident Vice President v. Commissioner of Income Tax (2007 PTD 1560), A.N. Lakshman Shenoy v. The Income Tax Officer, Ernakulam and another (AIR 1958 SC 795), Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (1993 SCMR 1232), Messrs Pakistan Educational Society v. The Government of Pakistan through Chairman and Secretary, Revenue Division, Islamabad and 2 others (1993 PTD 804), Republic Motors Ltd. v. Income Tax Officer and others (1990 PTD 889), Philips Electrical Company of Pakistan (Pvt.) Limited v. Income-Tax Officer, Companies Circle B-3, Karachi and another (1990 PTD 389) and Abdul Hamid and others v. Deputy Collector, Excise and Taxation/Income Tax Officer and C.I.T and others (1988 PTD 324) in support of the above contentions. The case-law relied on by the learned counsel for the petitioner actually supports the case of the respondent assesses.

15. For the above reasons, this reference is concluded and the question of law raised in this reference is answered in the negative.

16. Office shall send a copy of this judgment under the seal of the Court to the learned Appellate Tribunal Inland Revenue as per section 133(5) of the Income Tax Ordinance, 2001. SCHEDULE "A" Sr.No. Case Number

1. ITR No.14/2012

2. ITR No.18/2012

3. ITR No.19/2012

4. ITR No.21/2012

5. ITR No.24/2012

6. ITR No.25/2012

7. ITR No.26/2012

8. ITR No.27/2012

9. ITR No.28/2012

10. ITR No.29/2012

11. ITR No.30/2012

12. ITR No.32/2012

13. ITR No.33/2012

14. ITR No.34/2012

15. ITR No.43/2012

16. ITR No.69/2012

17. ITR No.70/2012

18. ITR No.71/2012

19. ITR No.72/2012 KMZ/C-7/L Question answered in negative.