2014 PLP (Trib (PTD)

MUHAMMAD RIAZ, ACCOUNTANT MEMBER.

The applicant through these miscellaneous applications has requested for the rectification of this Tribunal's order passed in I.T.A. No. 131/IB of 2011 and I.T.A. No. 132/IB of 2011 dated 2-7-2011 for the tax years 2004 and 2005 in the case of Messrs Gondal CNG Station Rawalpindi.

2. The appeals I.T.As. Nos. 153 and 154/IB/2011 for the Tax Years 2004 and 2005 filed by the taxpayer Messrs Macca CNG Gas Enterprises, Rawalpindi against the order dated 24-2-2011 of CIR (Appeals-III) Islamabad were disposed of by this Tribunal vide combined order dated 2-7-2011, dismissing the departmental appeal. The relevant part of dissenting note of the learned Accountant Member accepting the appeals of the taxpayer is reproduced as hereunder:-- "I agree with the view of my learned brother Judicial Member that the assessing officer failed to issue a notice required in terms of the order of honourable Lahore High Court Rawalpindi Bench. An earlier notice for amendment of assessment with addition of a negotiated version of OGRA formula was held 'insufficient' by the Superior Court. Hence, the amendment of assessment based upon a notice declared defective by the learned High Court, cannot be sustained. However, I differ with the view expressed by my learned brother Judicial Member with regard to the characterization of OGRA formula as a definite information. It is a formula showing scientific conversion. No doubt, the factors like specific gravity, temperature and pressure vary from place to place depending on altitude and climatic conditions, however, the variation is nearly negligible. Thus it can validly be characterized as definite information."

3. The above findings of Divisional Bench of ATIR have been challenged to be defective through this misc. application on the following grounds:- (a) That the Honorable High Court had issued directions for issuance of fresh notice with regard of selection of the case for audit under section 177(4) of the Income Tax Ordinance, 2001, whereas the assessing officer has amended the assessment under section 122(1) read with section 122(5) of the Income Tax Ordinance, 2001 on the basis of definite information as mentioned in the body of assessment order. Since the assessing officer had not proceeded within the meanings of section 177(4) such as there was no need to issue fresh notice under section 177(4). The Learned ATIR could not appreciate the exact nature of proceedings despite clear mentioning the same in the show-cause notice dated 23-6-2010 by the author of order. The Learned ATIR has after an elaborated basis derived from a Persian verse relied on this very issue of issuance of fresh notice under section 177(4) as per directions of High Court. Had the proceedings been conducted under section 177 the directions of Honourable High Court would have become operative. But quite contrary to this, the author or order opted to directly proceed under section 122(5) on the basis of definite information. As such the findings of Learned ATIR that High Court's decisions are not been complied with are based on an omission which needs rectification. (b) The Learned ATIR also has held that the sales based on OGRA formula is not covered within the definition of "Definite Information", whereas the Learned Accounting Member in his dissenting note has differed with the findings of the Learned Judicial Member and has declared the OGRA formula based - sales as definite information. The difference of opinion raised between the two Honourable Members of the Tribunal on the issue of "Definite Information" should have been resolved while referring the case to Third Member but the same has not been done. The principles of natural justice demand that in case of split opinion, a third opinion should had been sought to resolve the same. However, in the instant case the same has not been done. It is not understandable that how the opinion/judgment of learned judicial member would prevail if there is differed opinion of another learned Member of the same bench. As such the circumstances warrant that on this accounts, the case is referred to 3rd members/referee.

4. In response to notice issued for hearing Mr. Jawad, DR represented the department/applicant while Mr. Atif Waheed, Advocate appeared on behalf of the respondent/taxpayer. Both of whom have been heard. The record has been examined and the case discussed in detail.

5. The first issue raised through the instant application that the amendment order dated 30-6-2010 passed under section 122(1) read with section 122(5) of the Ordinance, is independent of the earlier proceedings initiated before the judgment of High Court is not found to be correct from the facts of the case. The notices issued on 11-2-2010 and 23-6-2010 under section 122(9) of the Ordinance are on the basis of same facts and figures during the course of proceedings started after the notice issued under section 177(4) on 16-3-2009 by the Taxation Officer, RTO, Rawalpindi. Further in the first para of his notice issued under section 122(9) of the Ordinance, on 23-6-2010 it has been stated by the taxation officer that the requirement of the Lahore High Court has duly been fulfilled vide Commissioner (Audit), RTO, Rawalpindi letter No. CIR/Audit/J-3(12)/2009/1643 dated 16-3-2009 whereas the said judgment was delivered by the High Court on 8-6-2009 i.e. after the issuance of said notice. In any case the Tribunal after considering and discussing in detail all the facts of the case has given its opinion on the issue as per its order dated 2-7-2011. The learned DR has failed to point out any mistake floating on the surface of the record or the order of the Tribunal requiring rectification under section 221 of the Ordinance.

6. So far as the next issue is concerned, the plea of the department is not sustainable because my brother learned Accountant Member agreed with me in first paragraph of his finding which is reproduced as under:-- "I agree with the view of my learned brother Judicial Member that the Assessing Officer failed to issue a notice required in terms of the order of honourable Lahore High Court Rawalpindi Bench. An earlier notice for amendment of assessment with addition of a negotiated version of OGRA formula was held 'insufficient' by the Superior Court. Hence, the amendment of assessment based upon a notice declared defective by the learned High Court, cannot be sustained."

7. Hence fate of appeal was collectively decided and other aspect of difference could not change fate of appeal. Hence it was not needed to refer appeal to the Referee Member.

8. However, in any case second issue as to whether the OGRA formula is a definite information or not now stands resolved against the department and in favour of the taxpayer by the decision of the third member of ATIR vide order in I.T.A. No.359/IB of 2011 in the case of Messrs Shaheen CNG Station, Rawalpindi etc. The same issue also stands decided in favour of taxpayer by the Lahore High Court vide its judgment dated 12-11-2012 in case of CIR v. Khan CNG Filling Station etc. in ITR No.31 of 2012. The relevant part of above mentioned judgment of the Lahore High Court is reproduced as hereunder:-- "

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 ." "

14. In the present case the department itself complete 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 a departmental opinion evolved on the basis of self styled formula .."

9. In view of the above discussion miscellaneous applications filed by the department for both years stand rejected. CMA/162/Tax(Trib.) Application rejected.