1986 PLP (Trib (PTD)

IBRAR HUSSAIN NAQVI (MEMBER).‑‑This is a departmental appeal against the deletion of Rs.34,000 added back by the Income‑tax Officer under sections 13(1C) and 13(1D) of the repealed Income‑tax Act for the assessment year 1976‑

77. During the course of hearing before a Single Bench two legal questions were raised which were referred for determination to the Full Bench of the Tribunal. The first question was as to whether the amendments made by the Finance Ordinance, 1980 in the Income‑tax Ordinance were effective from the date on which the Ordinance was made Le. 26‑6‑1980 or with effect from 1‑7‑1980. The second question was as to whether the factum of prior approval of the Inspecting Assistant Commissioner in regard to the additions to be made under section 13 of the Income‑tax Ordinance must be mentioned in the assessment order.

2. As for the first question, it is only of academic nature inasmuch as this question has arisen because of the wrong mentioning of the section under which the addition has been made. The Income‑tax Officer had made an addition under sections 13(IC) and (1D) of the Income‑tax Ordinance, 1979 while in fact the addition should have been made under sections 4(2C) and (2D) of the repealed Income‑tax Act, 1922 as the case relates to the assessment year 1976‑

77. As such prior approval of the Inspecting Assistant Commissioner was necessary and the effective date of Finance Ordinance, 1980, therefore, has no relevancy. In any case since this question has been referred we would like to observe that a Finance Ordinance has two aspects. One is giving effect of the financial proposals and the second is the amending part of it. So far as the financial proposals are concerned the effective date always is the first of July of each year while the amending part of the Finance Act takes effect immediately on the date when the Ordinance is promulgated unless a contrary intention is expressed in the Finance Ordinance positively or by necessary implication, Now the Finance Ordinance, 1980 begins with the following words:‑ "An Ordinance to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 1980 and to amend certain laws." Similarly, the preamble of the Ordinance again speaks of the financial proposals beginning on the first day of July, 1980 and 'to amend certain laws for the purposes hereinafter appearing'. Subsection (3) of section (1) reads as under:‑ "It shall come into force at once." The notification No. F‑17(1)/80‑Pub., dated 26th June, 1980 says that the Ordinance was made on 26‑6‑1980 by the President and reads as under:‑ "The following Ordinance made by the President on the 26th June, 1980 is hereby published for general information." Now reading this notification alongwith subsections (3) and (1) of the Ordinance make it clear that the Ordinance was made on 26th June which came into force et once. Since in the preamble it has been specifically mentioned that the financial proposals would be effective for the year beginning on the first day of June, 1980, although this Ordinance came into force at once i.e. 26th June, 1980, it will only be effective on that part of the Ordinance which amends various laws including Income‑tax Ordinance, 1979. Therefore, the amendment in section 13 in regard to the prior approval of the Inspecting Assistant Commissioner was effective from 26th June, 1980, and not from 1st June, 1980.

3. In any case as stated above, the whole exercise is academic in that prior approval of the Inspecting Assistant Commissioner was obtained in this case and this was shown to the learned counsel for the assessee at the time of hearing before the Single Bench and this fact was conceded by him.

4. The second question is as to whether the factum of obtaining of the prior approval is necessarily to be mentioned in the assessment order and if not what is the effect of it. The contention of the learned counsel for the assessee was that it is incumbent on the assessing officer to mention the factum of the prior approval of the Inspecting Assistant Commissioner failing which the addition made is liable to be cancelled. The learned counsel for the assessee has relied upon a decision of the Tribunal in I.T.A. No. 508(KB) of 1978‑

79. In that case there was an observation of the Tribunal as under:‑ "If following of a procedure (or obtaining the approval of superior authority) is contained in a provision of law itself the assessing officer is not only expected to adhere to the letter of law, but also to manifest in the assessment that the requirements of law had been adhered to. In the present case, the assessing officer has not mentioned whether the steps envisaged under section (2F) of section 4 were taken by him." It may here be mentioned at the outset that in the case relied upon by the learned counsel for the assessee the assessment was annulled but in that case the prior approval of the Inspecting Assistant Commissioner was not obtained at all. Therefore, the observation in regard to the mentioning of the piror approval of the Inspecting Assistant Commissioner in itself is only obiter dicto. In any case the law does not lay down that the factum of the approval of the Inspecting Assistant Commissioner must be mentioned in the assessment order though it would be expedient and proper if the assessing officer does mention of the fact that the Inspecting Assistant Commissioner's approval has been obtained. Such a statement would give an initial presumption of the fact um of the piror approval and would avoid unnecessary objection on the part of the assessee. However, when the Inspecting Assistant Commissioner's: approval has been obtained, mere fact that this fact has not been mentioned by the assessing officer in the assessment order does not in any way invalidate the order of the assessing officer. In the present case, as stated above, the Inspecting Assistant Commissioner's approval was obtained and shown to the learned counsel who conceded this fact, Therefore, mere fact that this fact was not mentioned in the assessment order would not invalidate of the addition made by the assessing officer.

5. Since the learned Appellate Assistant Commissioner has deleted the addition merely on the assumption that the Inspecting Assistant Commissioner's approval had not been obtained and had not gone into D the merits of the case, we vacate the order of the learned Appellate Assistant Commissioner and remit the case back to him for fresh decision on merits. M.Y.H Case remanded