ATTOCK CEMENT PAKISTAN LTD. VS ADDITIONAL COMMISSIONER INLAND REVENUE, 2016 PTD-KARACHI-HIGH-COURT-SINDH 1872 (2015)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---Constitution of Pakistan, Art. 199---Constitutional petition---Show cause notice---Amendment of assessment, retrospective effect---Scope---Assessee was aggrieved of show cause notice issued by Income Tax authorities whereby original assessment order was amended after five years---Validity---Relevant period under S. 122(2) and (4) of Income Tax Ordinance, 2001, for amending assessment order by Commissioner was end of financial year in which it was issued or deemed to have been issued the assessment order to taxpayer---Section 122(2) and (4) of the Ordinance did not speak of the period starting from the end of financial year about which assessment order was passed but it was about financial year in which either Commissioner had issued or deemed to have issued the order that was relevant and would be so applicable in the case of assessee also for counting the limitation---Assessee filed return for tax year 2009 on 25-01-2010 which for all intents and purposes was deemed to be an assessment order issued by Commissioner when that year ended on 30-06-2010, therefore, it was relevant date as a point of time wherefrom period of five years as provided in S. 122 of Income Tax Ordinance, 2001, was to start counting---If it was so counted the show cause notice in question was within the time limit as prescribed therein---Petition was dismissed in circumstances.

2011 PTD 1588 and Civil Petition No.1306 of 2014 ref.

(b) Interpretation of statutes---

----Retrospective effect---Scope---Procedural law applies retroactively unless contrary is provided in law itself---In the procedure, nobody has vested right and if some change is made in original law prescribing some procedure it has to be read as if it was always part of original law from its inception.

The State v. Maulvi Muhammad Jamil and others PLD 1965 SC 681; Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187 and Liaquat Ali and others v. The State 1992 SCMR 372 rel.

Anwar Kashif Mumtaz and Amar Athar Saeed and Usman Alam for Petitioners.

Amjad Javed Hshmi for Respondent.

Aslam Butt, D.A.-G.

Date of hearing: 29th October, 2015.

ORDER

MUHAMMAD IQBAL KALHORO, J.---In the instant petition, the issue that has been brought in is about the dispute over the limitation of the impugned show cause notice dated 02.03.2015 issued by Respondent No.1/Additional Commissioner Inland Revenue, Audit Range-A, Zone-II, Large Taxpayer's Unit, Karachi to the petitioner/ Messer's Attock Cement Pakistan Limited under section 122(9) for amendment of assessment of tax year 2009, under section 122(5A) of Income Tax Ordinance, 2001 (2001 Ordinance). The only ground urged by the learned counsel to assail the impugned notice was in relation to the limitation. He argued that it was time-barred as in terms of Section 122(4)(a) of 2001 Ordinance, the period provided to the Commissioner to amend the original assessment order was five years which expired before issuance of the show cause notice. Explaining the same he stated that the show cause notice pertained to tax year 2009, which ended on 30th June 2009 therefore in law amendment of the assessment, if any, was to be done within 5 years thereof and not later. He urged that period of 5 years in petitioner's case stood completed on 30.6.2014; after that any amendment of assessment order was unlawful. Learned counsel also informed that limitation of five years was enhanced to six years through the Financial Act, 2009 but that law since was enacted in July 2009, was not applicable to tax year 2009 which ended on 30.06.2009. He in this regard also referred to Section 174 of 2001 Ordinance to emphasize that in subsection (3) whereof also the period provided to maintain the record of accounts for the petitioner during relevant was five years. While referring to amendment made in 2001 Ordinance through Financial Act, 2009 whereby limitation of five years for amending the assessment was increased to six years, he stated that amendment in procedural law could not take away the vested rights created in favour of a party and since in the matter in hand the period of 5 years was applicable at the relevant time under the law only that period would be considered. Learned counsel lastly relied upon a judgment reported in 2011 PTD 1588 and on an unreported judgment passed in Civil Petition No. 1306/2014 in the case of Commissioner Income Tax, Rawalpindi v. Maj. General (Rtd.) Dr. C.M. Anwar and others.

2.On the other hand, Mr. Amjad Javed Hashmi, advocate first argued on the point of amendment made through the Financial Act, 2009 whereby limitation for amending the assessment was in effect increased from 5 to 6 years. He stated that the procedural law had always retrospective effect and as the enhancement of limitation to amend the assessment was a mixed question of procedural law and facts, no vested right of the petitioner was taken away as the show cause notice was within the prescribed limit of 6 years. He next stated that the petitioner had filed return of income on 25.01.2010, therefore the return so furnished by the petitioner was deemed to he an assessment order issued to the tax payer by the Commissioner in the tax year 2010, which tax year admittedly ended on 30.06.2010. In his view under the law counting of period for the purpose of limitation was to start from the end of financial year 2010 and not from the end of tax year 2009. He next argued that in section 122(4)(a), it was five years within which the Commissioner was competent to amend the original assessment from the end of the financial year in which he had issued or was treated to have issued the original assessment order to the taxpayer. In view of such clear period of limitation, the impugned show cause notice did suffer from any legal infirmity.

3.We heard the counsel for the parties and perused the material available on record. The issue in the facts and circumstances, as illustrated above, is with regard to the applicability of Section 122(4)(a) and the amending provision of the Financial Act, 2009. For ready reference, it is reproduced herein under:--

122. Amendment of assessments.---(1) Subject to this section, the Commissioner may amend an assessment order treated as issued under Section 120 or issued under section 121, or issued under sections 59, 59A, 62, 63 or 65 of the repealed Ordinance, by making such alteration or additions as the Commissioner considers necessary.

(2)No order under subsection (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer.

(3)Where a taxpayer furnished a revised return under sub-section (6) or (6A) of section 114 -

a)the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and

b)the taxpayer's revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.

(4)Where an assessment order (hereinafter referred to as the "original assessment") has been amended under subsection (1) (3) or (5A), the Commissioner may further amend (as many times as may be necessary) the original assessment within the later of--

a)five years [from the end of the financial year in which] the Commissioner has issued or is treated as having issued the original assessment order to the taxpayer; or

b)one year [from the end of the financial year in which] the Commissioner has issued or is treated as having issued to amended assessment order to the taxpayer.

[(4A) In respect of an assessment made under the repealed Ordinance, nothing contained in subsection (2) or, as the case may be, subsection (4) shall be so construed as to have extended or curtailed the time limit specified in section 65 of the aforesaid Ordinance in respect of an assessment order passed under that section and the time-limit specified in that section shall apply accordingly.]

(Emphasis added)

4.Obviously in terms of subsections (2) and (4) (a) of section 122 the relevant period for amending the assessment order by the Commissioner is the end of financial year in which he has issued or deemed to have issued the assessment order to the taxpayer. It does not speak of the period starting from the end of financial year about which assessment order was passed as was argued by the learned counsel for the petitioner, but it tells about the financial year in which either the Commissioner has issued or deemed to have issued the order that is relevant and would be so applicable in the case of the petitioner also for counting the limitation. Admittedly, the petitioner filed the return for the tax year 2009 on 25.01.2010 which for all intents and purposes is deemed to be an assessment order issued by the Commissioner, and admittedly that year ended on 30.6.2010, therefore it would be the relevant date as a point of time wherefrom the period of 5 years as provided in section 122 would start counting. If it is so counted, there remains no ambiguity that the impugned show cause notice is within the time limit as prescribed therein. Needless to say it is well settled principle of law that procedural law applies retroactively, unless contrary is provided in law itself. In the procedure, nobody has vested right. And if some change is made in the original law prescribing some procedure, it is read as if it was always part of the original law from its inception. However if through a new alteration in the law, a vested right of a party is taken away without express provision providing so, it will not be read to have retrospective affect. Reference to the cases of The State v. Maulvi Muhammad Jamil and others reported in PLD 1965 SC 681; Adnan Afzal v. Capt. Sher Afzal reported in PLD 1969 SC 187; Liaquat Ali and others v. The State reported in 1992 SCMR 372 and Air League of PIAC Employees v. Federation of Pakistan and others can be made to support such proposition. The show cause notice to the petitioner was well within the period of limitation.

5.Consequently, we saw no merits in the petition and dismissed, it vide our short order passed on 29.10.2015.

MH/A-93/SindhPetition dismissed.