' MUHAMMAD RAZA KHAN, J.---Through this reference the applicant, i,e,, the taxpayer, has formulated the following questions of law against the decision, dated 17-3-2005 of the learned Income Tax Appellate Tribunal, Islamabad:-- "(i) Whether under the law and circumstances of the case the learned Tribunal was justified in confirming the order under section 122(5) of Income Tax Ordinance, 2001 by accepting the appeal of respondent.
(ii) Whether the order under section 122(5) is legal and falls under all corners of the section 122 and Taxation Officer was justified to amend the assessment already completed strictly according to the relevant provisions of law.
(iii) Whether already thrashed out issue in the assessment year 1994-95 can be re-opened in the assessm ent year 2001-2002 when the exemption under section 188(C) of Second Schedule of Ordinance, 1979 was expressly/rightly allowed uptill 30-6-2001.
(iv) Whether the Tribunal was justified in holding the exemption period from date of trial production instead of commercial production as given in clause 118(c) of the late Ordinance.
(v) Whether any remedial action can be taken in the year undet assessment instead of the year to which the issue relates only due to the expiry of limitation.
(vi) Whether already granted exemption with specific dates can be withdrawn in the last year of exemption by amending the assessm ent under section 122(5) of the Ordinance, 2001.
(vii) Whether any mistake if any takes place in the assessment year 1994-95 can be rectified in the assessm ent year 2001-2002.
(viii)Whether audit observation tantamount to definite information and any action under section 122(5) can be taken when no new facts/information come into the possession of respondent".
2. The facts of the case leading to this reference are, in brief, that the applicant is a private limited company engaged in the manufacture and sale of PVC pipes etc. The Company started its production with effect from 10-2-1993. The first assessment was made for the year 1994-95. The return was filed claiming a net income of Rs,5,49,532 and a claim was made for exemption under clause (118-C) of the Second Schedule to the Income Tax Ordinance, 1979, which was allowed and the assessee was held entitled to tax holiday for a period of 8 years by holding that the assessee has commenced the trial production with effect from 10-2-1993 and the commercial production with effect from 1-7-1993 and, therefore, it was decided that period of 8 years tax holiday would expire on 30-6-2001. During the assessment year 2000-2001 being the last year of the tax holiday the return was submitted but on 1-4-2003 a show-cause notice was issued for the cancellation of exemption for the period of 11-2-2001 to 30-6-2001. This show-cause notice was responded but the contention of the applicant was not accepted by the respondent and vide an order, dated 7-5- 2003 the tax of Rs, 48,25,732 was charged under section 122(5) of the Income. Tax Ordinance, 2001.
This order was challenged by the applicant before the Commissioner of Income Tax (Appeals), Peshawar who vide his order, dated 19-2-2004 accepted the appeal annulled the impugned order under section 122 of the Ordinance and restored the original order passed under section 62 of the Income Tax Ordinance, 1979. The respondent challenged the said order before the learned Income Tax Appellate Tribunal, Islamabad through a departmental appeal, which was allowed on 17-3- 2005 and the order of the learned Commissioner (Appeals) was set aside, thereby the amendment under section 122(5) was restored. This order of the learned Income Tax Appellate Tribunal has been challenged in this reference on the questions of law as reproduced in para. 1 above.
3. The points in controversy in this case are whether the production during the period of 10-2-1993 to 30-6-1993 was a trial production or was it a commercial production and secondly whether the exemption already granted under section 118-C can be reviewed during the final year of the tax holiday i,e, after 8 years.
4. It was argued on behalf of the respondent that there was audit observation that the goods produced during the said period was sold in the open market which has fetched considerable sale proceeds and thus it cannot be considered to be a trial production rather it shall be deemed to be commercial production and thereby the period of tax holiday had to expire on 10th of February, 2001 and the income thereafter was taxable.
5. The learned counsel for the applicant however, explained that firstly the Income Tax Ordinance, 2001 cannot be applied to the tax holiday allowed under the repealed Ordinance and the assessm ent for the year, 1993-94 cannot be reviewed under the new Ordinance. Secondly, that the trial production could not be deemed to be commercial production after 8 years. Thirdly, that the applicant had submitted the entire facts and record to the Assessing Officer along with the return for the year, 1993-94 and there was no "definite information" to justify the amendment in the order.
Lastly, that applicant did not conceal any fact from the respondent and even if the earlier order of.
Granting tax exemption up to 30-6-2001 be presumed to be incorrect, the findings of the relevant authority had attained finality as it was not challenged in time and the same could not be rectified through the impugned process.
6. At the outset it has to be observed that the assessment year for which the impugned order has been made related to the year, 2000-2001 and the Assessing Officer has considered that tax on income of the applicant with effect from 11-2-2001 to 30-6-2001 shall be assessed as the tax holiday has culminated on 10-2-2001 by considering the commercial production with effect from 10-2-1993. The notice has been issued under section 122(5) and the Assessment has been amended on the basis of the said notice. The Income Tax Ordinance, 2001 had come into force with effect from 1-7-2002 and the same could not be applied retrospectively to the assessment year 2000-2001. The relevant extract from the original section 122(5) reads as follows:-- "Amendment of Assessm ent (1) Subject to this section, the Commissioner may amend an assessm ent order..By making such alterations or additions as the Commissioner considers necessary to ensure that the taxpayer is liable for the correct amount of tax for the tax yeas to which the assessm ent order relates..". ".
(5) Subject to section 5 an assessm ent order shall only be amended under subsection (1) and an amended assessm ent shall only be amended under subsection (4) where the Commissioner; (a) is of the view that this Ordinance has been incorrectly applied in making the assessment or an incorrect claim for exemption of any amount"
7. Thus in the original statute the action under subsection (5) could be initiated only if "this Ordinance' i,e, the Income Tax Ordinance, 2001 has been incorrectly applied. However, by a subsequent notification bearing S. R.
0. No, 633(1)/2002, dated 14-9-2002 it was provided that:-- "S.R.O. 633(1)/2002, dated 14-9-2002. In exercise of the powers conferred by section 240 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to direct that in making any assessm ent for the year beginning on the first day of July, 2002 or making any deduction or collection of tax for the year beginning on the first day of July, 2002, the said Ordinance shall have effect as if.
(3) in section 122-
(b) in subsection (5), clause (a), after the word "Ordinance", the words "or the repealed Ordinance" were inserted;"
8. Notwithstanding the reservations whether a substantive part of a statute could be amended by a subordinate legislation, even if the said amendment is presumed to be correct exercise of powers under section 240, the exercise of authority under such amended section 122(5) can be applied to the assessm ents for the year, 2002 onwards. It cannot, therefore, be applied for the assessm ent of 2000-2001.
9. Clause (b) of subsection (5) of section 122 further provides that the amendment in the assessm ent can be made by the Commissioner only if he "has definite information acquired from an audit or otherwise that the assessment is incorrect". The term "definite information" used in Clause (b) has been earlier used in section 65 of the repealed Ordinance and which has been discussed threadbare in several judgments. Reference to few judgments of the Hon'ble Supreme Court of Pakistan shall be appropriate where it was held that:- "The expression "definite information" will include factual information as well as information about the existence of a binding judgment of a competent Court of law/forum for the purpose of section 65 of the Income Tax Ordinance. This rule will not cover a case where, after framing assessment consciously, the Assessing Authorities realize that any provision of law has been ignored, not applied or misapplied. Such discovery does not fall within the ambit of term "definite information" as used in section 65 of the Income Tax Ordinance. (Inspecting Assistant Commissioner and another v. Pakistan Herald Ltd. (1997 PTD 1485).
(2) 65---"Once all the facts have been fully disclosed by the assessee and considered by the Income Tax Authorities and the assessments have been consciously completed, and no new fact has been discovered", there can be no ground for interference with these concluded transactions under the provisions of law. Edulji Dinshaw Limited v. Income Tax Officer (1990 PTD 155 SC of Pakistan).
(3) "Definite information" does not mean change of option or different interpretation or deriving a different conclusion from a given set of facts (1997 PTD 1485).
(4) Where income tax officer accepted the claim after detailed scrutiny of case and subsequently a notice was issued for reopening the assessment by the Income Tax Officer as the basis of alleged oversight or mistake on the part of various Assessing Officer it cannot be treated as fresh material and the notice issued was without lawful authority. (Arafat Woollen Mills v. ITO (1990-61 Tax 46 SC.
Pakistan).
10. Thus from the observations of the Hon'ble Supreme Court as referred to in the preceding paragraph it can be held that once the entire facts are placed by the assessee before Income Tax Authorities and they take a decision by considering the facts and circumstances of the case, such a decision cannot be subsequently amended, by merely holding that through the audit report it has transpired that the income generated from the sale of goods during the said period on trial production amounted to commercial production. Had there been a report of the audit that the assessee had concealed certain income or has defrauded in the submission of returns, it would certainly have been a definite information. However, if the entire facts were placed before the respondent, the view of the Commissioner for determining a particular period as trial production cannot be subsequently termed as commercial production merely on the views expressed in the audit report:
11. The respondent, being the concerned agency for collection of revenue, is given certain additional powers to recover the amount due to the State but in the exercise of such authority the respondent department cannot trespass beyond the established principles of dispensation of justice. The taxpayer cannot be placed merely at the mercy of the Assessing Officer that he should be exempted by one of them and, after lapse of so many years, another one withdraws the tax exemption or amends the earlier assessment. Once a decision is made on the basis of detailed examination of facts and circumstances placed on the record and no further remedy is availed to challenge the same or get it rectified, it attains finality despite the fact that the views of the authority concerned may: be legally or factually incorrect. The forum of appeal, appellate Tribunal and a reference to this Court were already available when the exemption was earlier granted up to 30-6-2001. When the remedy of appeal etc. Was not sought the earlier decision becomes binding and the same could not be undone at the discretion of the Assessing Officer.
12. The learned Commissioner of Income Tax (Appeals) had referred to so many judgments where the Supreme Court has given a conclusive determination that merely change of opinion does not justify the action under section 65 of the repealed Ordinance or section 66-A of the current one.
The decision of the Hon'ble Supreme Court amounts to be law declared and it had binding effect on all the fora within the country. The precedents reproduced in the order impugned before the learned Tribunal, were merely ignored in the order impugned herein. Thus the impugned order of the learned Tribunal suffers from inherent legal defects and violation of the Constitution and it also indicates that the order has been passed mechanically, without the application of mind. So the learned Tribunal was not justified in confirming the order under section 122(5) of the Income Tax Ordinance, 2001 by its retrospective application to the assessment year 2000-2001 and by modifying and amending the earlier order passed with regard to the assessment year 1993-94. The Taxation Officer could not amend the assessment already completed and the period of tax holiday duly specified by the competent authority and which has attained finality as further remedy against such an order was never availed. When law itself provides for distinction between the trial production and the commercial production as per section 118-C of Second Schedule of the repealed Ordinance, the Assessing Officer shall be committing a legal error by holding that the entire production, right from the first day of operation, was a commercial one without giving the latitude of even a single day. This is practically and logically impossible that a factory shall come into commercial production right from first day of its operation. The production cannot be termed as commercial merely for the reason that the goods, so produced are sold in the open market.
After all anything produced by a factory has to be utilized and its sale in the open market is one of the modes of trial production where feed back from the consumer market is obtained about the produced goods. In the entire taxation regime the status of production has never been categorized into trial or commercial production merely on the ground of its sale in the market or on the quantum of sale proceeds.
13. Thus in view of the observations recorded hereinbefore, we accept this reference, set aside the order of the learned Appellate Tribunal, dated 17-3-2005 and restore the order of the learned Commissioner Appeals, dated 19-2-2004.