COMMISSIONER OF INCOME/WEALTH TAX VS MUHAMMAD AMIN, 2016 PTD-LAHORE-HIGH-COURT-LAHORE 2409 (2015)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 136(1), 1(2) & 156---Reference---Limitation---Refusal to refer question of law to High Court---Miscellaneous application against original order dated 07-02-2001 was dismissed on 28-08-2001 which did not merge in original order---Effect---Authorities were required to challenge original order dated 07-02-2001 separately within limitation as application under S.136(1) of Income Tax Ordinance, 1979 was filed on 04-01-2002---Validity---Application was barred by time and Income Tax Appellate Tribunal rightly declined to refer the matter to High Court---Order of Income Tax Appellate Tribunal dated 07-02-2001 could not be rectified under S.156 of Income Tax Ordinance, 1979, unless there was any mistake or error apparent on record---High Court declined to frame and answer proposed question of law---Reference was dismissed in circumstances.

Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore v. Assistant Commissioner of Income Tax Circle 6, Lahore and another 2002 PTD 1878; Commissioner of Income Tax v. Messrs Rizwan Brothers 2005 PTD 2537 and Commissioner of Income Tax/Wealth Tax v. Muhammad Naseem Khan 2013 PTD 2005 rel.

Javed Athar for Applicant.

Kamran Shahid for Respondent.

ORDER

This application has been filed under section 136(2) of the Income Tax Ordinance, 1979 (Repealed Ordinance) against the order dated 27.2.2002 (impugned order) passed by Income Tax Appellate Tribunal, Lahore Bench, Lahore (Tribunal), whereby application of the department under section 136(1) of the repealed ordinance for referring questions of law to this Court was declined.

2.Learned counsel for the applicant submits that impugned order of the Tribunal is not correct and therefore, following questions of law may be framed and answered by this Court.

i)"Whether on the facts and circumstances of the case the learned ITAT was justified in relying upon a judgment of Superior Court which did not exist in the field at the time of the order passed by the learned ITAT?".

ii)"Whether on the facts and circumstances of the case the learned ITAT was justified to reject the miscellaneous application of the department by observing that the incorrect reliance upon a judgment is not in mistake apparent from record? "

3.Learned counsel for the respondent submits that there is no error in the impugned order as no question of law was made out, for referring to this Court. Further submits that reference is only maintainable against order of the Tribunal passed under section 135 of the Repealed Ordinance and not against dismissal of miscellaneous application under section 156 of the Repealed Ordinance.

4.We have heard the arguments of learned counsel for the parties and perused the record.

5.In order to better appreciate the controversy in hand, it is necessary to give brief admitted background of the matter. In the present case, Assessing Officer revised the assessment order under section 66-A of the Repealed Ordinance against the respondent assessee being erroneous and prejudicial to interest of revenue. In appeal filed by respondent assessee, the said order of Assessing Officer was vacated by the learned Tribunal on 07.2.2001. The applicant department instead of filing reference application before this Court, filed miscellaneous application on 03.4.2001 under section 156 of the Repealed Ordinance for rectification of Tribunals order dated 07.2.2001. The said rectification application was dismissed by Tribunal on 28.8.2001. The applicant department filed application under section 136(1) of the Repealed Ordinance on 4.1.2002 before Tribunal for referring the questions of law to this Court. However, the learned Tribunal on 27.2.2002 declined to refer questions to this court. Applicant department being aggrieved of order dated 27.2.2002 filed instant application under section 136(2) of the Repealed Ordinance, for framing and answering proposed questions of law, by this Court.

6.From the above back ground, it is evident that earlier no reference application under section 136(1) of the Repealed Ordinance was filed by the department against Tribunal's original order dated 07.2.2001. Rather the department filed rectification application under section 156 of the Repealed Ordinance against the said order, which was dismissed on 28.8.2001. It is relevant to note at this juncture that as per law settled by this Court in Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore v. Assistant Commissioner of Income Tax Circle 6, Lahore and another (2002 PTD 1878) and Commissioner of Income Tax v. Messrs Rizwan Brothers (2005 PTD 2537), when against original order dated 07.2.2001, the miscellaneous application was dismissed on 28.8.2001, the same did not merge in original order and applicant department was required to challenge the original order dated 07.2.2001, separately within limitation. As application under section 136(1) of the Repealed Ordinance was filed on 04.1.2002, the same was clearly barred by time in respect of order dated 07.2.2001.

7.Even on merits, the learned Tribunal through impugned order dated 27.2.2002, has rightly declined to refer the questions to this Court, because order of Tribunal dated 07.2.2001, could not be rectified under section 156 of the Repealed Ordinance, unless there was any mistake or error apparent on record. This Court in Commissioner of Income Tax/ Wealth Tax v. Muhammad Naseem Khan (2013 PTD 2005), while interpreting the scope of section 156 of the Repealed Ordinance held as under:--

"The expression "mistake apparent on record" as used in section 156(1) of the Income Tax Ordinance, 1979 means that error or mistake is so manifest and clear, which, if permitted to remain on record may have material affect on the case. Wherein an error of fact or law which defect has direct nexus with the question of determination of rights of parties, affecting their substantial rights or causing prejudice to their interest is not a mistake apparent on the record to be rectified under section 156 of the Income Tax Ordinance, 1979. The perusal of impugned order dated 13.3.2008 shows that the learned Tribunal had reassessed the matter and after interpreting provision of law formed an opinion different from earlier order dated 28.5.2007 which goes outside the scope of rectification.

We feel that order dated 28.5.2007 could not be recalled under section 156 of the Income Tax Ordinance, 1979 and if the respondent was aggrieved against order dated 28.5.2007 due to some legal defect could only be examined by the next higher authority and could not be rectified under section 156 of the Act ibid. In this context we have been guided by the law laid down in Commissioner of Income Tax Karachi v. Messrs Shadman Cotton Mills Ltd Karachi through Director (2008 SCMR 204) Commissioner of Income Tax Karachi v. Abdul Ghani (PLD 2007 SC 308), Baqar v. Muhammad Rafique and others (2003 SCMR 1401), Commissioner of Income Tax Companies II, Karachi v. Messrs National Food Laboratories (1992 SCMR 687) Sh. Muhammad Iftikiar-ul-Haq v. The Income Tax Officer Bahawalpur (PLD 1966 SC 524) and Pakistan River Steamers Ltd v. Commissioner of Income Tax Daca (1971 PTD 204). The question of law resettled by this Court is therefore, answered in the affirmative.

8.In view of above, we decline to frame and answer the proposed questions of law.

9.Resultantly, this application is decided against the applicant department.

10.Office shall send copy of this order under the seal of the Court to the learned Appellate Tribunal as required under the law.

MH/C-6/LApplication dismissed.