MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---A common question of law is involved in all the above petitions and therefore, they are disposed of by this single consolidated judgment.
2. The relevant facts are that in C.P. No. D-643 of 2004 the assessments pertaining to the petitioner were completed on the following dates:
(1) Assessm ent year 2000-2001 dated 20-1-2001 under section 62 of the Income Tax Ordinance, 1979.
(2) Assessm ent year 2001-2002, dated 26-4-2002 under section 59(1) of the Income Tax Ordinance, 1979.
(3) Assessm ents year 2000-2003, dated 21-4-2003 under section 59(1) of the Income Tax Ordinance, 1979.
3. The assessm ents in respect of petitioners in C.Ps. Nos. D-644 and 646 of 2004, pertaining to assessm ent year 2002-2003 were finalized on 20-5-2003 under section 59(1) of the Income Tax Ordinance, 1979.
4. The Additional Commissioner of Income Tax Region-II Companies, Zone-I, Karachi, issued notices under section 122 (5-A) of the Income Tax Ordinance, 2001 on 14-4-2004 calling upon the petitioners to show cause as to why. The above finalized assessments may not be amended.
5. The petitioners contended through their Advocate that the provisions contained in section 122 (5-A) of the Income Tax Ordinance, 2001, are pari materia to the provisions contained in section 66-A of the repealed Income Tax Ordinance, 1979. In saving clause i.e. Section 239 of the Income Tax Ordinance, 2001, the provisions contained-in section 66-A of the repealed Income Tax Ordinance, 1979 were not saved and subsection (5-A) of section 122 of the Income Tax Ordinance, 2001 was inserted by Finance Act, 2003, dated 17-6-2003, with effect from 1-7-2003. No retrospective effect was given to the newly-inserted subsection and consequently, it shall not be applicable to the assessm ents finalized before 1-7-2003, and, therefore, the impugned notices being illegal and without sanction of law may be withdrawn. The contention was not accepted and consequently, the petitioners approached this Court through these petitions under Article 199 of the Constitution of Islamic Republic of Pakistan, praying to declare the impugned notices issued by respondent No.3 as illegal, void, without jurisdiction and the proceedings in pursuance thereof be declared null and void ab initio.
6. We have heard Mr. Mansoorul Arfin, learned counsel for the petitioners and Mr. Aqeel Ahmed Abbasi, learned counsel for the respondents.
7. Mr. Mansoorul Arfin has submitted that a similar situation arose with the promulgation of Income Tax Ordinance, 1979, and repeal of Income Tax Act, 1977, with effect from 1-7-1979, similar provision contained in section 14-A of the Repealed Income Tax Act, 1922 was not saved by section 166 of the repealing Ordinance of 1979 and no analogous provision was enacted in the Income Tax Ordinance, 1979, However, section 66-A was inserted in the Income-Tax Ordinance, 1979 by Finance Ordinance, 1980 with effect from 1-7-1980. A question arose, whether the provisions contained in section 66-A of the Income Tax Ordinance, 1979 had retrospective application and the assessment finalized before 1st July, 1980 could be revised by recourse to section 66-A of the Income Tax Ordinance, 1979. The C.B.R. Vide C. No.I (48) IT-I/79, dated 17-2-1981 opined that section 66-A of the repealed Income Tax Ordinance, 1979, had no retrospective application. The assessments finalized before 1st July, 1980, could not be reopened under section 66-A of the Income Tax Ordinance, 1979.
8. Mr. Arfin has further pointed out that the view taken by C.B.R. Through the above circular came for consideration before Income Tax Appellate Tribunal Lahore Bench. The Tribunal did not agree with the view taken by C.B.R. And held that, the provisions being procedural in nature had retrospective effect. On reference made to the Lahore High Court, a Division Bench approved the view taken by the C.B.R. And held that, section 66-A of the repealed Income Tax Ordinance, 1979 was not procedural in nature and had no retrospective effect. It was not applicable to the completed assessm ents before its insertion in the statute book.
9. On the other hand, Mr. Aqeel Ahmed Abbasi, learned counsel for the respondents has supported the view taken by the respondent No.3 and has submitted that although subsection (5-A) of section 122 of the Income Tax Ordinance, 2001 was inserted with effect from 1-7-2003, but it was retrospective in application. He submitted that the scheme contained in the repealed Income Tax Ordinance, 1979, was entirely different from the scheme of law contained in the Income Tax Ordinance, 2001, and therefore, the judgment dealing with the law contained in Income Tax Ordinance, 1979 is not applicable to the cases emanating from Income Tax Ordinance, 2001.
However, he had no option but to concede that the provisions contained in section 66-A of the repealed Income Tax Ordinance, 1979 are pari materia to the provisions contained in section 122 (5A) of the Income Tax Ordinance, 2001. Mr. Aqeel Ahmed Abbasi in spite of vehemently supporting the retrospective application of subsection (5-A) of section 122 of Income Tax Ordinance, 2001 was not able to distinguish, the view taken by the C.B.R. And upheld by the Lahore High Court in the case of Messrs Monnoo Industries Ltd. v. CIT (2001 PTD 1525).
10. We have carefully considered the contentions raised by the learned Advocates for the parties and the relevant provision of law. In view of the fact that the learned counsel for the respondents has conceded that the provisions contained in section 66-A of the repealed Income Tax Ordinance, 1979, were pari materia to the provisions contained in section 122(5-A) of the Income Tax Ordinance, 2001, we need not to reproduce the provisions for the purpose of comparison. We are of the considered view that, the facts and circumstances giving rise to these petitions are on all fours to the situation which arose with insertion of section 66-A in the Income Tax Ordinance, 1979 with effect from 1-7-1980, therefore, the view taken by the C.B.R. Clinches the issue under consideration and the direction contained is still binding on the respondents. Circular No. 1(48) IT-I/79, dated 17- 2-1981 is reproduced below: "Retrospectivity of application of section 66A of the Income Tax Ordinance, 1979-Instructions regarding.
It would be recalled that section 34A of the repealed Income Tax Act, 1922 provided that the Inspecting Assistant Commissioner of Income Tax could reopen an assessment made by the Income Tax Officer if it was erroneous insofar as it was prejudicial to the interests of Revenue. No order could, however, be made under the said section after expiry of four years from the date of order sought to be revised. A corresponding provision was not available in the Income Tax Ordinance, 1979 at the time of its promulgation. However, section 66A was inserted through Finance Ordinance, 1980 which corresponds to the provisions of section 34A of the repealed Income Tax Act, 1922.
(2) Certain queries have been made from the Board raising the following questions:--
(i) whether the proceedings under section 34A of the repealed Act pending on 1st July, 1979, have lapsed on repeal of the said Act;
(ii) whether it is possible to revise assessments completed after the promulgation of Income Tax Ordinance, 1979 but before the insertion of section 66A in 1980.
(3) The undersigned is directed to say that the principle applicable in such case is given in section 6 of the General Clauses Act, according to which the repeal does not affect the proceedings already commenced unless the repealing Act otherwise intends. The repeal does not revive anything not in force or existing at the time the repeal takes effect. Hence the proceedings which were pending under the repealed Act may continue under that Act. However, if proceedings under section MA had not been initiated when the old Act was repealed these cannot be initiated under the repealed Act. Similarly section 66A does not have retrospective application. The assessments finalized before 1st July, 1980 cannot be reopened under section 66A of the Income Tax Ordinance, 1979.
(4) The undersigned is further directed to say that if there is any difficulty in applying this principle in a particular case, it may be referred to the Board for advice."
11. In the case of Messrs Monnoo Industries Ltd. (supra), the following question was referred:-- "Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal was justified under law in holding that section 66A brought into statute on 1-7-1980 is retrospective in its nature and is applicable to the assessment proceedings for the year, 1977-78 and the C.B.R. Circular No.1 (48)111/1/79, dated 17-2-1981 is not applicable on the case in questions?"
12. While examining the issue, if section 66-A of the repealed Income Tax Ordinance, 1979 was retrospective in operation and was applicable to the assessments finalized before insertion of the said provisions the learned Division Bench of Lahore High Court held that, "having considered the submission made at the bar we are persuaded to agree that section 66-A is not procedural in nature, and therefore, it could not have retrospective effect to touch the completed assessments before its introduction on the statute book. The interpretation made by the C.B.R. Through the aforesaid circular appears to be more in consonance with law. Particularly in view of the fact that revisional provisions were not saved by section 166 of the Income Tax Ordinance providing for repeal and savings of the late Income Tax Act, 1922".
13. The question reproduced above was answered in negative. We respectfully agree with the views expressed by the learned Judges of the Lahore High Court.
14. The facts and circumstances in the present petitions being squarely similar, we are persuaded to agree with the contention of Mr. Mansoorul Arfm, learned counsel for the petitioners that the provision contained in subsection (5-A) of section- 122 of the Income Tax Ordinance, 2001, inserted with effect form 1-7-2003, is not retrospective in operation. Consequently, the assessments finalized before 1-7-2003 cannot be reopened/revised/amended in exercise of jurisdiction under the above provisions. Admittedly, all the notices impugned in these petitions are in respect of the assessm ents finalized before 1-7-2003, and consequently all the impugned notices are without jurisdiction, illegal and void ab initio. All the notices impugned in these petitions are therefore, hereby quashed along with proceedings in pursuance thereof. The petitions are allowed accordingly.
15. After hearing the learned Advocates for the parties on 2-3-2005, the petitions were allowed by a short order. These are the detailed reasons in support thereof. .