1963 PLP 224 (PTD)

SAJJAD AHMAD, J.‑In the return of Income‑tax for the assessment year 1953‑54, the petitioner Company (Kalat Coal Company Limited) claimed that a sum of Rs. 16,012 be written off as bad debts. The claim was disallowed by the Income‑tax Officer who held that the amount claimed as bad debts represented advances paid to labourers and to lorrywalas, which were not for adequate consideration and were consequently irrecoverable loans rather than bad debts. Further reasons were also given, namely, that no cash book was produced by the Company for the period from the 1st of June 1950, to the 31st of April 1951, that the books of accounts maintained from the 1st of May 1952, to the 31st of March 1953, were not reliable and receipts in most of the cases of these advances were not available, and that there was no proof that these advances had actually become' irrecoverable as no action whatsoever had been taken against the defaulters concerned. , Tile petitioner Company preferred an appeal to the Appellate Assistant Commissioner of Income- tax, `A' Range, Karachi, who upheld the order of the Income‑tax Officer, agreeing with the reasons given by him and observing further as follows :‑ "The appellant has not produced any new evidence to improve his position. Old account books are also not pro duced to prove the nature and origin of these advances. In the circumstances, I find no reason to interfere with the Income -tax Officer's action." The' company then filed a revision petition before the Income- tax Commissioner, South Zone, Karachi, under section 33A(2) of the Income‑tax Act of 1922. This was also dismissed on the 29th of June 1962. In his revisional order the Commissioner noted as follows :‑ "I have looked into the records. It is abundantly clear that the sum claimed as bad debts was in fact advances paid to labourers and lorrywalas and not a trade debt. Hence the question of its being allowed as a bad debt does not arise." The petitioner Company has now filed a writ petition in this Court under Article 98 of the Constitution of the Republic of Pakistan, 1962, for quashment of the orders of the Commissioner mentioned above, and for a direction to him to rehear the peti tioner's revision. The main grievance made is that the revision petition was dismissed without affording an opportunity to the petitioner to be hear' in support of his petition and to lead evidence. The question raised turns on the nature and scope of the order made by the Commissioner in his revisional jurisdiction under section 33A(2) of the Income‑tax Act, and the relief which this Court can give to the petitioner Company in relation to the order.

2. One main argument employed by the learned counsel for the petitioner is the effect of the legislative change in section 33 of the Income‑tax Act in 1941, which gave a right to an assessee to move the Commissioner under section 33A, subsection (2) of the Income‑tax Act, which, it is contended, entailed the incidence of a right of hearing for him. It would be profitable to notice here the change referred to by the learned counsel. Before its amendment in 1941 by Act XXIII of 1941, section 33 read as follows :‑ "33(1) The Commissioner may of his own motion call for the record of any proceeding under this Act which has been taken by any authority subordinate to him or by himself when exercising the powers of an Assistant Commissioner under subsection (4) of section 5. (2) On receipt of the record the Commissioner may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such orders thereon as he thinks fit : Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard." After the' amendment of 1941, the section was re‑cast as follows "33A (1) The Commissioner may of his own motion call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon,, not being an order prejudicial to the assessee, as he thinks fit : Provided that the Commissioner shall not revise any order under this subsection, if‑ (a) whether an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal, the time within which such appeal may be made has not expired ; or a (b) the order is pending on an appeal before the Appellate Assistant Commissioner or has been made the subject of an appeal to the Appellate Tribunal ; or (c) the order has been made more than one year previously : Provided further that the Commissioner may, for reasons to be recorded by him in writing, also revise under this sub section any order made more than one year previously. (2) The Commissioner may, on application by an assessee for revision of an order under this Act passed by any authority subordinate to the Commissioner, made within one year from the date of the order or within such further period as the Commissioner may consider fit to allow, on being satisfied that the assessee was prevented by sufficient cause from making the application within that period, call for the record of the proceeding in which such order was passed, and on receipt of the record may make such inquiry or cause such inquiry to be made, and subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit Provided that the Commissioner shall not revise any order under this subsection, if‑ (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made, the time within which such appeal may be made has, not expired or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal ; or (b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate Assistant Commissioner ; or (c) the order has been made the subject of an appeal to the Appellate Tribunal : Provided further that an order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee. (3) Every application by an assessee under subsection (2) shall be accompanied by a fee of twenty‑five rupees." It will be seen that both the old and the new sections preserves the suo motu powers of the Commissioner to send for the record of the proceedings taken by a subordinate authority, and after making an inquiry pass such orders as he thinks fit, not being an order prejudicial to the assessee according to the new section, and under the old one, not passing such an order without afford ing the assessee a reasonable opportunity. The new section, however, has placed certain limitations on the revisional powers which are‑ (a) that the Commissioner shall not revise an order 'where an appeal against that order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal and the time for the same has not expired, or in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal. (b) that the order is pending in appeal before the Appellate Assistant Commissioner or has been made the subject of an appeal to the Appellate Tribunal, or (c) that the order has been made more than one year previously. This last limitation, however, is modulated by the proviso that the Commissioner may revise an order made more than one year previously for reasons to be recorded by him in writing. It will be seen that subsection (2) of the new section 33 is a fresh addition giving the right to an assessee to make an application for revisions, but this again is subject to the limitation contained in clauses (a), (b) and (c) and the proviso added to this subsection and the condition laid down in subsection (3) that the application by an assessee has to be accompanied by a fee of twenty‑five rupees. It is contended that since the Legislature has introduced subsection (2) to section 33A, providing a remedy of revision to the assessee before the Commissioner, independently of the latter's powers to grant the relief on his own motion, the relief would be rendered nugatory if the Commissioner were to discard out of hand the revision petition of an assessee, without giving him a hearing and claiming for himself an absolute discretion to interfere or not to interfere in the matter which will be no advancement on the position as envisaged under subsection (1) of section 33 of the Income‑tax Act. I am inclined to think that while subsection (2) has brought the right of an assessee on a statutory footing to move a revision application to the Commissioner, it has not correspondingly reduced the powers of the Commissioner in dealing with such applications including their summary dismissal by him without hearing the assessee. The subsection is couched in language which does not disturb the discretion of the Commissioner in dealing with the matter and there is no obligation contained in the subsection that the Commissioner shall not dismiss the petition without hearing the petitioner. That a hearing was not intended or envisaged by the legislature as a matter of right for the assessee in the added subsection is clear from the fact that where the Legislature has contemplated such a right, it has clearly manifested its intention about it in certain provisions of the Income‑tax Act. For example, in respect of the appellate proceedings before the Appellate Assistant Commissioner under section 30 it is provided by section 31 of the Act that the Appellate Assistant Commis sioner shall fix a day and place for the hearing of the appeal and may from time to time adjourn the hearing. Similarly, sub section 2 (a) of section 31 provides that the Appellate Assistant Commissioner may at the hearing of the appeal allow an appellant to go into any ground of appeal not specified in the grounds of appeal, if the Appellate Assistant Commissioner is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. In the same manner, in regard to appeals to the Appellate Tribunal, it is laid down in subsection (4) of section 31 that the Appellate Tribunal shall give both parties to the appeal an opportunity of being heard. A study of the provisions relating to the nature of the appeal proceedings before the Appellate Assistant Commissioner and the Appellate Tribunal and comparing the same with subsections (1) and (2) of section 33A, containing the scope of the revisional proceedings before the Income‑tax Commissioner, the difference between the two becomes clear and also that the two remedies are mutually exclusive, i.e., if the remedy of appeal is availed of or the time for it has not expired or in the case of an appeal to the Appellate Tribunal the right has not been waived, the remedy of revision to the Commissioner is not permissible. The scheme of the Income‑tax Act with particular reference to the provisions cited above, appears to me to signify the distinction that whereas the appellate proceedings before the Appellate Assistant Commis sioner and the Appellate Tribunal are judicial proceedings in which an assessee has a statutory right of audience and hearing, the revision application allowed under section 33A (2) providing a right to the assessee to move the Commissioner is in the nature of a summary relief and a summary remedy, not entailing the right of a hearing for the assessee as a matter of legal right, nor casting an obligation on the Commissioner not to withhold that relief without giving a hearing to the assessee concerned. In support of his contention the learned counsel for the petitioner has cited two rulings from the Dacca High Court, as Fazlur Rahman v. Commissioner of Income‑tax, East Pakistan, Dacca decided by a Division Bench, consisting of A. Sattar and S. Ali, JJ. and Sayedur Rahman v. Commis sioner of Income‑tax, East Pakisian, Dacca, decided by S. M. Murshed and S. D. Ahmed, JJ. In both these cases their Lordships have formed the view that the Commissioner while acting under subsection (2) of section 33A of the Income‑tax Act is a quasi judicial Tribunal and he must, therefore, afford an opportunity to the assessee of hearing him on his petition before dismissing it, laying down further that when the Commis sioner acts suo motu under subsection (1) of section 33A no duty is cast upon him to exercise his powers thereunder and in this sense he exercises an administrative function, but under sub section (2) which confers a right upon the assessee, it becomes incumbent upon the Commissioner to consider all the material that has been placed before him in an application by an aggrieved assessee and on such consideration the Commissioner has to decide by exercising his judicial mind where he would grant the relief sought for or refuse it, which function is a judicial function and he is thus bound to conform to the principles of natural justice and to give a hearing to an aggrieved assessee who has made an application under subsection (2) of section 33A of the Income‑tax Act.

3. I regret I have not been able to agree with the view expressed by their Lordships of the Dacca High Court in the cases cited above, as in my opinion, and I say this with the utmost respect, that view does not conform with the scheme of the relevant provision of the Income‑tax Act pertaining to the alternate and mutually exclusive remedies of appeal and revision, the former having all the incidents of a judicial remedy while the latter not having so. On the contrary the omission of the word "hearing" in the provision relating to revision in contradiction to the provisions of appeal to the Assistant Commissioner and the Appellate Tribunal, wherein a regular hearing is enjoined, leads me to the conclusion that the relief contemplated for the assessee by way of a revision application under section 33A (2) is only a summary relief, and the Commissioner of Income‑tax in according it or withholding it is not transformed into a judicial forum, but acts purely in an administrative capacity. The reorientation of the section in 1941, which appears to have wholly influenced the judgment of their Lordships of the Dacca High Court does not in my opinion change the essentials of the revisional jurisdiction of the Commissioner as exercisable by him under the old section or under the present one in its first or second part. As already stated above, the newly introduced sub section (2) of section 33A recognises the right of an assessee to move the Commissioner in revision as a matter of right and to demand his orders on the same, but neither the right itself nor the mode of invocation, as provided by the requirement of a fee of Rs. 25 along with the application make any difference in the nature of the relief nor in the obligations of the Commis sioner in determining it. The fact that an assessee before making use of this remedy has either to exhaust his judicial remedies, as provided by the law, or to waive them, is not without significance, clearly pointing out the intention of the Legislature that the remedy provided under section 33, whether under subsection (1) of subsection (2) is out and out an extra judicial remedy. The further fact that no order prejudicial to an assessee can be made in the exercise of revisional jurisdiction by the Commissioner, whereas it can be, under the appellate powers of the Assistant Commissioner or the Appellate Tribunal, points out the distinc tion between the two, the first not involving an elaborate enquiry with the normal concomitants of judicial hearings, but the second very much needing to do so to justify an order prejudicial to the interest of an assessee. In emphasising the distinction between judicial and administrative Tribunals, their Lordships of the Dacca High Court have referred to the observations of their Lordships of the Supreme Court in the case of Tariq Transport Company, Lahore v. Sargodha Bhera Bus Service and another (P L D 1958 S C (Pak.) 437), to the effect that "A Tribunal is not always furnished with the trappings of a Court, nor will such trappings make its action judicial. The character of the action taken in a given case and the nature of the right on which it operates must determine whether that action is judicial, ministerial or legislative or whether it is simply the act of public agent . . . . . . . In certiorari the initial question is whether the official whose action is called in question was acting under law. If he was not, the act was that of a mere public agent and action at law and not certiorari is the remedy. If, however, the public functionary has acted in exercise of a statutory authority, then the question to be determined is whether he was the sole judge of facts and of the necessity, expediency, advisability or reasonableness of the action to be taken. If the reply be in the affirmative, he was not acting judicially and his discretion is not liable to judicial review. But if he was under any obligation to find the facts in a judicial or specially prescribed manner, a material depar ture from the procedure which has adversely affected the rights of a party would render his action liable to judicial review, even if, on the facts to be so found, the action to be taken depended on his discretion." With the utmost deference again, I find great support in these observations for the humble view which I have adopted in the, matter in opposition to their Lordships of the Dacca High Court. Obviously the Commissioner of Income‑tax while deciding an application under section 31 (2) is not placed under a legal obliga tion to accord hearing to the assessee or to engage himself in a judicial enquiry or to decide the matter in any prescribed manner. He has been given an absolute discretion to call for the record of the proceedings covered by the order under revision and may make such an enquiry or cause such enquiry to be made and may pass such order as he thinks fit. If, on examination of the assessee's application or the material supplied by him, he dismisses it in limine, not choosing to call for the record or to make any enquiry, he acts in exercise of his statutory authority, which makes him the sole judge of facts and of the necessity, expediency, advisability or reasonableness of the action to be taken. His action, therefore, is not subject to judicial review. As held by their Lordships of the Supreme Court, it is the character of the action taken and the nature of the right on which it operates which determine whether the action is judicial or otherwise, and on these tests the action of the Income‑tax Commissioner, as contemplated by section 33A (2) cannot be described as judicial. In the present case, however, even if I were persuaded to accept the contrary view that the Commissioner's order is amenable to judicial review, I would have been most hesitant to grant the petitioner any relief in writ jurisdiction. His claim with regard to the bad debts was fully considered by the competent authorities in the light of all the relevant material produced by him and no further hearings by the Commissioner would make a difference in the assessment of that claim. I would, therefore, dismiss this petition with costs. This order will be conveyed to the parties and their counsel by the Additional Registrar, Quetta, immediately. A. R. KHAN, J.‑I agree. Petition dismissed.