2002 PLP 1593 (PTD)

7. However, when the petitioner moved another application dated 5‑3‑1999, under section 156 of the income Tax Ordinance, 1979 a date was fixed for hearing on 25‑3‑1999 at Lahore but due to promotion of the then Member (Judicial), C.B.R., neither the hearing was conducted on 25‑3‑1999 nor at any date subsequently. The petitioner suffered a tragedy of errors thereafter.

8. The mistake identified in the un-disposed application under section 156, although, was deemed to have been rectified in applicant's favour by 30‑6‑2000 in accordance with subsection (3) of section 156 of the income Tax Ordinance, 1979, the D.C.I.T. proceeded to give effect 2o the un-rectified order of the Member (Judicial) (supra), vide his order dated 30‑6‑2000, and worked out addition to declared gross profit as under: ‑ Sales estimated Rs. 7,500,000 G. P. C4? 17.5% Rs. 1,312,500 Less G.P. shown Rs. 540.000 Balance for addition Rs. 772.500

9. Further, he made another addition of Rs.1,027,500 under section 13(1)(b) with following observations: "As the sales have been reduced by the Member (Judicial) to Rs.7,500,000 and the trading addition was also reduced accordingly, therefore, an addition to the tune of Rs.1,027,000 under section 13(1)(b) is being made after giving set off against the trading addition. The permission for this addition has been given by the worthy I.A.C., Range‑1, Zone‑B, Lahore vide his office Letter No.2012, dated 30‑6‑2000." 10 The complainant filed an appeal before the A.A.C. against the consequential order (supra) passed by the D.C.I.T. The appeal was dismissed without appreciating the facts correctly. The complainant consequently, filed second appeal before the Tribunal instituted vide I.T.A. No. 1043/LB of 2001.

11. Malik Ghulam Rasool, D.C.I.T. present on the date of hearing on behalf of the R.C.I.T., Central Region, Lahore, has submitted that the complainant meanwhile moved a miscellaneous application before the Tribunal seeking an interim order for stay of proceedings for recovery of impugned tax demand. The Income tax Appellate Tribunal granted stay of recovery for 30 days w.e.f. 24‑3‑2001 and on page 4 of the order, dated 24‑3‑12001 "remanded matter to the R.C.I.T., Eastern Region, Lahore with tile directions that the pending rectification application, if any, be taken up for its proper disposal on priority basis". The assessee/ petitioner moved direct applications to the D.C.I.T. as well as R.C.I.T:, Eastern Region, dated 26th and 21st March, 2001, respectively, for implementation of deemed rectification R.C.I.T. vide his office letter, dated 27th March, 2001 issued directions to the CIT, Zone‑B, Lahore to take necessary action under intimation to his office.

12. While the remand report was still due, the Tribunal took up the hearing of I.T.A. No. 1043/LB of 2001 (supra) on 19‑4‑2001. In their order recorded on 24‑4‑2001, they have observed on the issue (supra): "In the case of addition under section 13(1)(b), the CIT(A) has interpreted the order of the Member (Judicial) C.B.R. to have set aside addition. The addition under section 13(1)(b) then made in the second round by the Assessing Officer at Rs. 10,27,500 after quantifying the total addition under section 13(i)(b) at Rs.18 lacs (as before) and then setting it off against the trading account Addition of Rs.7,72,500 is assailed as illegal."

13. Regarding the alleged pendency of Application dated 5‑3‑1999 under section 156 (supra), the Tribunal has observed: "A.R. of appellant had deposed before the Tribunal that the said rectification application could not be disposed off by the Member (Judicial), C.B.R. as before hearing the appellant on the matter the Metpber (Judicial) C.B.R. had been promoted to Grade‑

22. However, this contention of the appellant is incorrect as it has subsequently transpired that the Member (Judicial) C.B.R. did actually examine appellant's rectification application on 6‑2‑1999 and "'after examination had made a noting on the order sheet to the effect:‑‑‑ The three issues stated to be `mistakes' have been adequately adjudicated upon a conscious decision. There is no mistake apparent from record....alleged trading addition of Rs.18 lacs adequately discussed in para. 5 of the order. May issue regret stating that there is no mistake in the revision order. In view of the factual position obtaining, we will ignore the appellant's contention pertaining to revision by the Member (Judicial.), C.B.R."

14. The errors in the finding supra too, are apparent from record as. evident from the findings of acts recorded in the foregoing paragraphs.

15. However, it is contended on behalf of the Revenue Division that the matter has been finally decided by the Income Tax Appellate Tribunal and the complaint is beyond the purview of Ordinance XXXV of 2000.

16. Be that as it may, the allegation of mal-administration on the part of the officers of the Income Tax Department made in the complaint stands proved. (a) The complainant first suffered due to inaction, on his application dated 5‑3‑1999 under section 156, of the Member (Judicial C. B. R. (b) Secondly, he suffered mal-administration on the part of the A.C.I.T., Sajjad Ahmad Malik posted in Circle‑29, Zone 'B', Lahore on 20‑6‑2000, who passed an arbitrary order on the issue of addition under section 13(1)(b) endorsed and approved by his I.A.C. in total disregard of the fact that an application under section 156 on the issue was pending before the Member (Judicial) C.B.R. even on 30‑6‑2000. (c) Thirdly, he suffered mal-administration on the part of the Appellate Additional Commissioner who confirmed the addition of Rs.1,800,000 under section 13(1)(b) disregarding the fact that his (appellant's) application under section 156 was deemed to have been decided in his favour in accordance with the provisions of subsection (3) of section 156 of the Income Tax Ordinance, 1979.

17. It is now recommended; (a) That the complainant may move a miscellaneous application to Income‑tax Appellate Tribunal under section 156 of the Income Tax Ordinance, 1979 for rectification of errors that have crept into their order due to misrepresentation and withholding of relevant facts from the Bench by the departmental representative. (b) That the Regional Commissioner of Income Tax, Eastern Zone, Lahore holds an enquiry to find out; (i) What action was taken by the C.I.T. Zone‑B, Lahore and the concerned officers under him on his direction vide Letter No. RGIT/J‑312/S.O. 1/4478 dated 27‑3‑2001? (ii) Why remand report was not submitted to the Income Tax Appellate Tribunal? (iii) Identify the officers responsible for inaction? , (iv) Propose action to be taken against the officers responsible for inaction.

18. Compliance report be submitted by November 20, 2001. C.M.A:/257/FTO Order accordingly.