Decision in appeal

In most of the cases the remand order is rather employed by the assessing officer to make the fate of assessee even worse

All previous discrepancies are meticulously taken care of so that the assessee finds no favourable factual or legal proposition to urge before the appellate forum.

Order passed under S. 122 creating liability is an assessment order for all intents and purposes and can only be dealt under Cl. (a) of S. 129(1) and binds the Commissioner (Appeals) only to confirm, modify or annul the assessment order and does not in any manner confer jurisdiction on the Commissioner (Appeals) to remand the matter to the assessing officer.

Said provision unequivocally eclipses and restricts the Commissioner's scope of power to confirm, modify or annul the assessment and the Commissioner's decision cannot go beyond the ambit of assessment.

Language of S.129(1)(a) only empowers the Commissioner (Appeals) to confirm, modify or annul the assessment order and exception whereof is enumerated in Cl. (b) of S. 129(1), which empowers the Commissioner (Appeals) to make such order as he thinks fit

Express language of law has unequivocally prescribed power of Commissioner (Appeals) under S. 129 while dealing with the assessment order and explicitly describes Commissioner (Appeals) powers while dealing with other cases

Section 129 unequivocally eclipses and restricts the power of Commissioner (Appeals) to confirm, modify or annul the assessment.

Section 129 of Income Tax Ordinance, 2001, has two shades: In case of an appeal against an assessment order the Commissioner (Appeals) may confirm, modify or annul the order whereas in any other case, the Commissioner (Appeals) may make such order as he deems fit

Words confirm, modify and annul used in S. 129(1)(a) confine and limit the power of the Commissioner (Appeals) to decide an appeal against an assessment order

Legislature has specifically inserted these words specifying the powers of Commissioner (Appeals) to exclude any other way of disposal of appeal against assessment orders, hence, it is clear from the plain language of S. 129(1)(a) that Commissioner (Appeals) is not vested with power to remand a case where the appeal is against an assessment order and he can only confirm, modify or annul the assessment order of assessing officer

Against an order other than assessment order, the Commissioner (Appeals), in case of appeal may pass an appropriate order as he thinks fit.

Commissioner (Appeals) under S. 129(1)(b) is vested with the powers to remand a case in an appeal against any order under Income Tax Ordinance, 2001, other than an assessment order.

Phrase "make such order as the Commissioner (Appeals) thinks fit" used in S. 129(1)(b) is not restricted term, phrase or expression rather it gives wide powers and broad discretion to Commissioner (Appeals) to pass an order including a remand of case to the assessing officer keeping in view the merits of the case and based on his judicial conscience

Such power or broad discretion are not limitless and have to be exercised within legal bounds.

Appellate Tribunal while invoking its jurisdiction under S. 221 of Income Tax Ordinance, 2001 on its own observed that in an earlier order it had committed some grave mistakes of law, which were based on some omitted law and statement of counsel for the appellant who had stated that the Commissioner (Appeals) had refused to entertain appeals manually, which was factually incorrect

Appellate Tribunal could entertain an appeal under S.131(1) of the Income Tax Ordinance, 2001 against an order passed by the Commissioner (Appeals) under S. 129 of the Income Tax Ordinance, 2001

Subsection (4) of S. 129 explicitly mandated that as soon as practicable after deciding an appeal, the Commissioner (Appeals) would serve his order on the appellant and the Commissioner

Said provision clearly provided that a written order had to be passed by the Commissioner (Appeals), irrespective of fate of matter argued before him by any taxpayer

If written order was not passed by the Commissioner (Appeals), Ss.127, 128 and 129 would become redundant

Redundancy was not attributable to the law

Tribunal observed that appeals should not have been entertained by the Tribunal under S. 131 of the Income Tax Ordinance, 2001, as no written orders were in field

Earlier order passed by the Appellate Tribunal was re-called and withdrawn.

Appellant assailed order passed by Commissioner (Appeals) whereby he had held that 'assessing officer may issue a fresh show-cause notice'

Validity

Commissioner (Appeals) had not given directions but had made observations as the word 'may' had been used which according to rules of interpretation could at best have persuasive and not mandatory connotations

Order of Commissioner (Appeals) had not caused prejudice to the appellant as the department could proceed with fresh show-cause notice with or without such observations provided the original limitation as contained in S.52(1) of Punjab Sales Tax on Services Act, 2012 had not lapsed

Commissioner (Appeals) had instead suggested the assessing officer to pass a speaking order strictly in accordance with the mandatory provisions of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, to protect the rights of the appellant

Appeal was dismissed.

Show-cause notice issued to the appellant alleged that it being franchisee had deposited certain amounts in the Bank account of the franchiser on account of royalty and advertisement, etc

Additional Commissioner, on failure of appellant to file any reply, passed the assessment order

Appeal filed against said order was dismissed

Validity

Appellant had failed to file any reply or submit any documents before the Additional Commissioner, but in total contrast to the admitted fact, the Commissioner (Appeals) in his order had stated that impugned order was passed after taking into account the contentions and documents produced by the appellant before the Additional Commissioner

Observation of the Commissioner (Appeals) was sufficient to hold that the Commissioner (Appeals) did not look into the record rather the order was passed merely on the basis of his imagination

Commissioner (Appeals) had mentioned the arguments of the appellant in the opening paragraph of his order but had failed to dilate upon the grounds of the appellant i.e. double taxation, wrong calculation of tax liability and paying of tax by the appellant throughout the period of alleged default

Order passed by Commissioner (Appeals) did not fulfill the requirements of the adjudication rules

Case was remanded to the Commissioner (Appeals) for decision afresh.

Appellant filed appeal before the Commissioner Inland Revenue (Appeals), whereby it was held that gain on sale of a plot was taxable under S.37(3) of the Income Tax Ordinance, 2001 and the same was to be treated as 'capital gains' on disposal of immovable assets

Commissioner Inland Revenue filed an application under S.221, Income Tax Ordinance, 2001, for rectification of the order by contending that the profit accrued to the appellant on account of sale of plot were taxed by him as income from business under S.18 of Income Tax Ordinance, 2001, which were incorrectly treated as capital gain

Commissioner Inland Revenue (Appeals) rectified the order accordingly

Validity

No debate or argument was required to the extent that the Commissioner Inland Revenue (Appeals) had applied a wrong provision of law while passing the order under S.129 of the Income Tax Ordinance, 2001, because immovable property was not qualified as "capital asset" under S.37(5) of the Ordinance in the year 2007

Appeal was dismissed.

Appellant assailed order passed by Commissioner (Appeals) whereby he had decided the appeal without hearing the appellant

Validity

Commissioner had not treated the appellant fairly and justly because he had passed a non-speaking order in a casual manner by himself admitting that the appellant had not attended the hearing nor submitted any supporting documents

Impugned order was vacated and the case was remanded to the Assessing Officer for providing proper opportunity of hearing to the appellant

Appeal was disposed of, accordingly.

Commissioner (Appeals) on the basis of grounds of appeal and written arguments, could have easily decided the appeal on merits

Twenty other appeals of similar nature were pending before the Commissioner (Appeals) and were reserved for orders

Order-in-appeal was set aside and the case was remanded to the Commissioner (Appeals) for decision on merits.

Commissioner Inland Revenue (Appeals), set aside impugned order under Ss.161/205 of Income Tax Ordinance, 2001 and remanded case to the Assessing Officer for passing speaking order after ensuring proper service of the notice

Inland Revenue Officer, without establishing proper service of notice upon the taxpayer raised a demand of Rs.39,859,962 ex-parte

When an ex parte action was taken without establishing proper service of the last notice upon the taxpayer, Assessing Officer could not initiate proceedings afresh

Legislature had done away with the relief of "setting aside" under S. 129(1)(a) of the Income Tax Ordinance, 2001

Order passed by the Assessing Officer, in circumstances suffered with glaring legal flaws, which snatched legality and propriety from the impugned orders and rendered them untenable in law, and were annulled

Section 161 of Income Tax Ordinance 2001, was applicable only within the income tax year during which the payment for goods and services were made

Commissioner Inland Revenue (Appeals) had grossly erred in law in setting aside the impugned orders under Ss.161/205 of the Income Tax Ordinance, 2001 in respect of tax years 2010 and 2011 for de novo action, which ought to have been annulled

Impugned orders under Ss.161/205 of the Income Tax Ordinance, 2001, were annulled by the Appellate Tribunal.

Plaintiff contended that impugned order, having been passed beyond the statutory period in terms of S. 129(4) of Income Tax Ordinance, 2001, was invalid

Validity

Impugned order passed by the Commissioner (Appeals) was admittedly beyond the period of 120 days and even beyond the extended period of 60 days thereafter

Section 129(4) of Income Tax Ordinance, 2001 although specified a period for passing appellate order by the Commissioner (Appeals), however, no consequences had been provided for non-passing of such appellate order within the prescribed period of limitation

Provision, wherein, some time limit was provided for performing an act and no consequence for such failure was provided, had always been termed as "directory" and not mandatory, and if a provision was directory in nature then even if any act was done or order passed beyond the period of any such limitation, that order would not, ipso facto, be an order without lawful authority

Appeal filed by the plaintiff, therefore, could not be deemed to have been allowed as prayed

Suit was dismissed in circumstances.

Appellant tax-payer, having taken different stance in the appeal contending that the undisclosed income was not his income but the same belonged to petitioner/company and its Directors

Commissioner (Appeals) confirmed the order and modified the same making the tax amount recoverable from the petitioner/Company and their Directors with direction that property of the petitioner be sold for recovery of the tax amount

Legality

Order of Commissioner (Appeals) was against law

Principles.

First Appellate Authority observed that order had been passed without providing adequate opportunity of being heard to the taxpayer and case was remanded to the assessing authority for de novo proceedings

Proper opportunity, as envisaged under the law, seemed to be not accorded to the taxpayer to explain his case by the assessing officer

In order to ascertain that the taxpayer had sufficient sources to make investment for purchase of motor-vehicles the assessing authority was best placed to verify the genuineness of the documentary evidences available with the taxpayer

First Appellate Authority had rightly remanded the case to the assessing officer for de novo proceedings in circumstances

Appellate Tribunal directed that every effort should be made to engage the taxpayer in the proceedings and matter be decided in accordance with law

Taxpayer was also directed to co-operate with the department in the proceedings in his own interest.

Department contended that First Appellate Authority was not justified to remand the issue on account of payment to forwarding agents that as the power of remand had been withdrawn by Finance Act, 2005; that deletion of tax charged on account of repair and maintenance, travelling and conveyance allowance and entertainment, the Assessing Officer had already given margin to the taxpayer regarding below taxable limit purchases; that order was fully justified and reasonable; and that with regard to deletion of tax charged on account of newspaper and periodicals and purchase of Yarn, Assessing Officer had rightly charged tax @ 5% which had wrongly been deleted by the First Appellate Authority without giving any reasons

Taxpayer contended that assessing officer wrongly disallowed 30% of the claim in any arbitrary manner on account of repair and maintenance, travelling and conveyance allowance and entertainment expense which had rightly been deleted by the First Appellate Authority; and tax charged on account of newspaper and periodical and purchase of yarn @ 5% had also rightly been deleted as the payments did not come under the category of services as the assessing officer charged tax under the head services

Validity

Order of First Appellate Authority on the issue of Repair and Maintenance, Travelling and Conveyance and Entertainment and Newspapers was well reasoned and did not require any interference being justified and Taxation Officer had made the additions without legal reasons.

First Appellate Authority set aside/remanded the order passed under 5.170 of the Income Tax Ordinance, 2001 with the direction to pass a speaking order in writing

Revenue contended that First Appellate Authority was not competent to set aside the order

Validity

Adjustment of Worker's Welfare Fund from refund claim had been made without passing the order as per requirements of S.4 of the Worker's Welfare Fund Ordinance, 1971

Taxation Officer had violated the mandatory procedure which rendered his action void

Under Cl.(b) of sub-section (9) of 5.129 of the Income Tax Ordinance, 2001, the First Appellate Authority was competent to make such order as he thought fit

Officer who was empowered to hear and decide the appeals against any order had an inherent power of setting aside the appeals if he deemed appropriate

Orders of First Appellate Authority was upheld and appeal of the Revenue was dismissed being devoid of merits.

Since there was no deeming provision in S.129 (4) of the Income Tax Ordinance, 2001 for time-barring of order in case of failure of First Appellate Authority to pass orders within time limit prescribed in S.129(4) of the Income Tax Ordinance. 2001, deeming time-barring of his order will not be sustainable in law.

Since legislature had not set forth any consequences of failure to comply with provision of S.129(4) of the Income Tax Ordinance, 2001, the provisions of S.129(4) of the Income Tax Ordinance, 2001 were not mandatory but directory in nature.

If First Appellate Authority fail to make the order before the expiration of 4 months from the end of the month for which the Appeal was lodged, the relief sought by the appellant in appeal shall be treated as having been given

Provisions of subsection (7) of 5.129 of the Income Tax Ordinance, 2001 stipulated that the provision of sub-section (5) of S.129 of the Income Tax Ordinance, 2001 shall not apply unless a notice by the appellant stating that no order under sub-section (I) had been made was personally served by the appellant on the Commissioner Appeals not less than 30 days before the expiration of period of four months

No such notices served by the appellant on the First Appellate Authority, were on the record, the relief provided under subsection (5) of S.129 of the Income Tax Ordinance, 2001 was not available to the appellant.

In the absence of any specific provision of law for consequences, if order is not passed by the First Appellate Authority, within the prescribed time under S. 129(4) of the Income Tax Ordinance, 2001, it could not be deemed that such order had become time-barred as effect of deeming provision was restricted to the section to which it was atfached and deeming provision could not be interpreted or enlarged to other provisions of the statute.

Reasons to be recorded in writing, if First Appellate Authority failed to pass his appellate order within the prescribed time limit

Provisions of S.129(4) of the Income Tax Ordinance, 2001, had been incorporated in the Income Tax Ordinance, 2001 for expeditious disposal of appeals filed by the taxpayer before First Appellate Authority and, negligence in this regard would be negation of the spirit of law

Law provided that First Appellate Authority shall pass the appellate order not later than 120 days from the date of filing of appeals or within extended period of 60 days, for reasons to be recorded in writing by the Commissioner (Appeals)

First Appellate Authority had been made liable to record reasons in writing if he failed to pass his appellate order within the prescribed time limit.

Decision in appeal-Limitation-Where legislature had wanted to prescribe time-barring limitation period for any action under the provision of Income Tax Ordinance, 2001, it had done so by incorporating specific provisions.

Proceedings of appeal in a casual manner by not fixing the appeal within the stipulated time and on being becoming aware of assessee's vested right

Validity

Relief became due to the assessee because it was refusal to receive prescribed applications that these were duly sent through Registered Post as well as through private courier

Applications were available on record bearing the initials of First Appellate Authority

By putting up signatures on such applications, it had manifestly been made clear that notices were served personally and failure to take cognizance of such notices by both the predecessor viz. the successor in office, had made the assessee entitled to relief under the provisions of S.129(5)(6), (7) of the Income Tax Ordinance, 2001 by acceptance of appeal as per prayers contained in appeals

Predecessor in office had not refuted in her affidavit that she refused to receive the applications under S.129(7) of the Income Tax Ordinance, 2001 and that the receipt through postal AD/Courier/by Dak through special messenger of the assessee

Successor in office preferred to proceed in a similar casual manner by not fixing the appeal within the stipulated time and on being becoming aware of assessee's vested right, still had not allowed relief by-operation of law, such negligence was not pardonable at the level of appellate forum

Prior to proceedings, for exercising the authority/jurisdiction over it the First Appellate Authority, was legally beyond to take serious notice of vested right created in favour of assessee by operation of law in terms of S.129(7) of the Income Tax Ordinance, 2001 debarring not only issuance of call notices resultantly intimating the fixation but also passing the order by adjudicating the grounds or in other words deciding the appeals on merits as relief sought was treated to have been given under S.129(6)(7) of the Income Tax Ordinance, 2001

Order had become illegal, which merited cancellation; to make it further clear, firstly issuing the notice intimating the fixing of appeal by the First Appellate Authority was illegal, thereafter adjudicating grounds of appeal, deciding the appeal was also illegal because relief sought in appeal was treated to have been given in terms of S.129(5) of the Income Tax Ordinance, 2001

By another manner assessee had been denied another vested right by betrayal by adjourning the appeals still same had been disposed of by marking, 'non-appeared' on exactly the same dates the Authorized Representative marked present by the First Appellate Authority in other cases

Order passed under S.122(5A) of the Income Tax Ordinance, 2001 stood vacated and orders subjected to action under S.122(5A) of the Income Tax Ordinance, 1979 stood restored to its original position and statement filed under S.143-B of the Income Tax Ordinance, 1979 and under S.115(4) of the Income Tax Ordinance, 2001 stood accepted

Such was a matter of concern for higher ups in the administrative structure of the department to take cognizance of lapses and of such attitude of both the First Appellate Authorities who happened to be first appellate forum importantly should not have allowed to take place unjust, illegal acts at their own level as well as in its office and making assessee victim of such discrepancies when vested legal right was brought to the notice of First Appellate Authority by the assessee

Negative relation to it, however, had been shown whereby the assessee had been made to suffer loss which was unbecoming of judicial officer.

Despite putting initials on application filed in terms of S.129(7) of the Income Tax Ordinance, 2001, not recording entry in the order sheet was an attempt just to deprive the assessee of his legal right and cover own faults.

Glaring deficiencies/discrepancies in the order sheet amount to flouting with impunity norms of judicial propriety/decency which warrants acceptance of the contentions taken by the assessee that the authority at the first appeal stage failed to be exercised in a judicial manner rather speaks of vindictiveness.

Order passed by the First Appellate Authority at the best could be described as worst shape of violation of, non-adhering to, non-compliance with, the expressed legal provisions as well as implementation of judgments of High Courts, further adding to the worst in allowing the adjournment, but still on the fixed date concluding the proceedings for deciding the appeals by marking the Authorized Representative as not present, this speaks so badly of personal behaviour of a judicial officer

Such behaviour was unbecoming of a judicial officer as well as of administration, it was unforgivable conduct, even in an uncivilized set-up this would not be permitted

Judicial officers were to establish high moral standards in their conduct which in the present case was totally absent

Conducting in such a way the judicial proceedings was in fact to circumvent the confidence building measures/steps taken by the Government of Pakistan viz. the Revenue Division; at the highest level these required to be probed into sabotaging the confidence-building steps even by the higher officers who were associated for policy making by Central Board of Revenue

Assessee through his Authorized Representative had set an excellent example of pursuing for a legal right steadfastly with perseverance and endurance

Assessee had been forced to face this ordeal simply on seeking a legal relief in a legal manner

Assessee's miscellaneous applications and appeal succeeded.