KH. FAROOQ SAEED, J. --- This judgment will dispose of P.T.Rs. Nos. 629/07, 816/07, 734/07, 684/07, 773/07, 289/07, 290/07, 334 to 339/07, 348/07, 459/07, 469 to 471/07, 511 to 513/07, 498 and 499/07, 464/07, 466 to 468/07, 505 to 507/07, 581/07, 593 to 596/07, 147/05, 208/06, 241 and 242/06, 355 and 356/06, 360/06, 374 and 375/07, 413/06, 123/07, 202/07, 206/07, 221/07, 222/07, 251/07, 252/07, 415/07, 418/07, '625 to 628/07, 630 to 633/07, 635 to 640/07, 643/07, 644/07, 707 to 710/07, 777 to 780/07, 347/07, 359/07, 617/07, 618/07, 461/06, 889 to 897/07, 861 to 864/07, 14 to 16/08, 841/07, 01 to 05/08, 849/07, 880/07, 881/07, 495/07, 496/07, 500/07, 715/07, 805 to 808/07, 831/07, 853/07, 854/07, 886 to 888/07, 519/07, 520/07, 582 to 584/07, 592/07, 679/07, 460/06, 461/07, 127/07, 168 to 173/07, 189/07, 419 to 421/07, 357/07, 364 to 366/07, 05/08, 580/07, 465/07, 629/07, 453/07, 642/07, 837/07, 882 to 885/07, 386/06, 372/07, 405/07, 406/07, 531 to 534/07, 540/07, 549/07, 550/07, 551/07, 612 to 614/07, 661 to 663/07, 698-A/07, 674/07, 868 to 870/07, 174 to 176/07, 793/07, 817/07, 818/07, 821/07, 823/07, 824/07, 830/07, 832/07, 833/07, 262/05, 263/05, 118/06, 23 to 25/07, 34 to 37/07, 78/07, 102/07, 114/07, 151 to 154/07, 166/07, 167/07, 838/07, 142/07, 843 and 844/07, 852/07, 855 to 860/07, 177 to 179/07, 183/07, 184/07, 244/07, 248 to 250/07, 294/07, 358/07, 391/07, 392/07, 462/07, 463/07, 09 to 11/08 as common questions of law are involved.
2. The Income Tax Ordinance, 2001 (for short the Ordinance) was published in the Gazette of Pakistan, Extraordinary on 13.9.2001. According to sub-section (3) of Section 1, it was to come into force on a date to be notified by the Federal Government. The Federal Government appointed 1st day. of July, 2002, to, be the date of enforcement of the Ordinance. The last section of the Ordinance viz. Section 240 (Removal of difficulties) provided for ,the power of the Federal Government to make such order, not inconsistent with the provision of this Ordinance, as may appear to it to be necessary for the purpose of removing the difficulty arising in giving effect to any provision of the Ordinance.
3. Before its actual enforcement, by way of Finance Ordinance, 2002, a number of changes were made in the Ordinance as it was originally published. These changes even included addition of a number of sections. The things did not stop there. Through S.R.O. No. 633(1)/2002, dated 14.9.2002 the Federal Government in purported exercise of the powers under Section 240 of the Ordinance made further amendments in Section 114 (Return of income), 121 (Assessment of persons who have not furnished a return), 122 (Amendment of assessments), 137 (Due date for payment of tax), 141 (Liquidators), 161 (Failure to pay tax collected or deducted), 221 (Rectification of mistakes) and 239 (Savings).
4. The amendments made through the aforesaid S.R.O. in Section 122 inter alia included insertion of Section (4-A) providing that "in making any assessment for the year beginning on the 1st day of July, 2002, or making any deduction or collection of tax for the year beginning on the 1st day of July, 2002, the Ordinance shall have effect as after sub-section (4) sub-section (4-A) is being inserted".
That sub-section read: "4-A". An amendment shall only be made within six years of the date of original assessm ent". Likewise in sub-section (5) after the word "Ordinance" the words or the 'repealed Ordinance" were inserted. The amendments made through the aforesaid a number of Constitutional petitions. Our learned brother Ali Nawaz Chohan, J. on 7.4.2005 while disposing of Constitutional Petitions Nos. 7788, 7971, 8154, 8314 of 2003, 8165 of 2003, 8166 of 2003, 8167 of 2003, 8184 of 2003, 8332 of 2003, 8333 of 2003, 7841 of 2003, 7843, 8258 of 2003, 2802 of 2004, 4168 of 2004 and 4174 of 2004 accepted the contentions raised before him that the provisions of Section 240 could not be invoked by the Federal Government to amend the superior legislation i.e. the provisions of the Ordinance through an inferior or subordinate legislation i.e. the S.R.O. His Lordship also agreed that the show-cause notices issued under Section 122 expressing the intention of the revenue' to amend the assessm ents which could not have otherwise teen issued but for the insertions made by way of said S.R.O. were legally incompetent.
5. Against the said consolidated judgment the revenue failed before the Supreme Court in re Commissioner of Income Tax, Zone-C, Lahore and others Vs. M/s. Kashmir Edible Oils Ltd. and others (2006 SCM R 109). The Hon'ble Supreme, Court while refusing grant of leave to appeal to the revenue observed as under:-- "S.R.O. No. 633(1)/2002, dated 14.9.2002 issued by the Federal Government, in purported exercise of powers conferred by S. 240, Income Tax Ordinance, 2001, whereby entrain amendments were made in Ss. 114, 121, 122, 137, 141, 161, 221 and 239 of the Income Tax Ordinance, 2001, was in excess of powers of delegated legislation to the Federal Government as contemplated by .S. 240 of the Ordinance and said notification was without lawful authority and of no legal effect.
6. In the present, petitions, the petitioner department has assailed the decision of Income Tax Appellate Tribunal in all the above P.T.Rs. So far as the issue is concerned, as of its impact it is common. However, the issues framed in consultation with legal advisors and respondents. counsel are as follows:--
(i) Retrospectivity and application of SRO 633(1)/2002, dated 14.9.2002 and consequential cancellation of notices issued on the basis thereof in respect of the assessments finalized prior to the enforcement of the Income Tax Ordinance, 2001.
(ii) Retrospectivity of the provisions of law inserted in terms of Section 122(5A) in Income Tax Ordinance, 2001 by virtue of Finance Ordinance, 2003. Whether the cases finalized under Income Tax Ordinance, 1979 upto 30.6.2003 can be cancelled under the said provision or not.
(iii) Retrospectivity of the Section 122(5) before and after its amendment by Finance Ordinance, 2003.
7. Learned Legal Advisor of the department of income tax firstly challenged the cancellation of the orders made by application of the amendment introduced through S.R.O. 633/2002. The findings of the learned Tribunal with regard thereto are that this issue has attained finality in terms of the decision given in case of "Kashmir Edible Oil Ltd. Vs. Federation of Pakistan" (supra) by the Supreme Court of Pakistan. However, the learned Legal Advisor says that he would like to distinguish the findings as some aspects of the legal position have net come under discussion. Locating history of amendment he says that the law has been introduced in 2001 while the same has been made operative from 1.7.2002 and onward. The provisions of Section 122 as originally introduced were comprehensive and rich enough to cover the reopening and cancellation of the already completed assessm ent. The Section 122(1) starts from the language, "subject to this section" and through subsequent language provides an unbridled and open power to amend an assessment order, treated as issued under Section 120 or issued under Section 121 or issued under Section 59, 59-A, 62, 63 or 65 of the repealed Ordinance. Further, he can make such alterations or additions as he considers necessary. Sub-section (2) of Section 122 speaks about the limitation while Sections 3 and 4 deal with revised return and amended order as well as its limitation. Section 4-A also talks about the limitation, however, its implied effect is that a case decided under the repealed Ordinance, 1979, can also be reopened. This argument comes from the words which have protected the limitation of Section 65. He said that later amendment in terms of sub-section (5) and (50A) respectively has reduced the scope of the amendments or additions by putting clog on its jurisdiction. He, therefore, prays that the decisions of the Supreme Court in the case of Kashmir.
Edible Oils mentioned (supra) may be considered as not applicable on the facts of the cases under discussion.
8. Regarding cases where proceedings are initiated under Section 122(5), he claims that Section 122(5) has assigned the jurisdiction of amendment and alteration or earlier completed assessm ents subject to the definite information. However, it is applicable on all the cases which are finalized by the income tax authorities earlier. In this opinion the provision provides for reopening of the assessm ent. It cancels or reopens a completed assessment and can be applied on and after 30.6.2003 at all proceedings completed earlier. In support of his arguments he refers Section 239 and claims that the sane through its sub-section (4) protects the situation. He has also referred certain paras from various judgments on the issue which in his favour support the department's view.
9. The same arguments have been advanced by learned Legal Advisor in respect of the other provision i.e. 125(5-A). The persistent view is that the same is applicable retrospectively on all the assessm ents finalized either under "Income Tax Ordinance, 1979 or 2001 as the case may be.
10. The respondents' view, however, was that the Income Tax Ordinance, 2001, is a novel piece of legislation. The manner in which it has been introduced and amended is unprecedented. It creates an impression, as is a new levy or a new charge freshly introduced in Pakistan. It is drafted in a manner as if there was no charge of Income Tax in the country prior to this law. Not only that the original text adds to the said impression but the amendments also could not bring about any major change in this basic understanding.
11. Mr. Shahbaz Butt, Advocate, is of the view that learned Legal Advisor has mostly referred those paras of the orders which are in favour of the petitioner. The same have been read out of context but the relevant ratio which is clear in its implication has not been highlighted. He says that even the judgments referred by the learned Legal Advisor in terms of "Kisan Yousaf Textile Mills, Faisalabad Vs. Commissioner of Income Tax" reported as 2005 91 Tax 480 and "Allied Motors Vs. C.I.D., Lahore" reported as 2004 PTD 1173 does not give any impression which learned Legal. Advisor is creating. The entire arguments in respect of SRO 633 or the subsequent amendment in Section 122(5) as well as Section 122(5-A) are already discussed in the said judgments with correct application and interpretation of law. He, however, claims that the matter in relation to SRO 633/2002 has attained finality and all the judgments on the issue have unanimity as well as clarity.
In the judgment of Kashmir Edible Oil (supra) SRO 633/2000 has been held as of no legal effect being ultra vires of the powers of the Central Board Of Revenue now Federal Board of Revenue, hence there is no question of its application on any assessment be that under Income Tax Ordinance, 1979 or 2001.
12. Regarding amendment of Section 122(5) and Section 122(5-A), the Courts in a long line of decisions have held in unequivocal and clear terms that these provisions cannot be applied retrospectively. In his opinion its retrospectivity would have remained inoperative even if there would have been specific instructions for it However, since it has not been made retrospective by the legislature, there is no question of its application on the proceedings finalized under Income Tax Ordinance, 1979. He than referred all the judgments on the issue which we shall discuss in latter part of this order.
13. He. also referred Section 6 of the General Clauses Act with the comment that in the presence of the said provision, the department enjoys full powers to continue with making, reopening, canceling or rectifying the earlier assessments.
14. Mian Ashiq Hussain, (Advocate) learned counsel for the respondents in some of the cases has came up with a new argument. He refers 2002 SCM R 39 in re: "Commissioner Sindh Employees Social Securities Institution and another Vs. M/s. E.M. Oil Mills and Industries Limited and 2 others" to contend in terms -of the wording of the judgment that 'as a general rule, every statute is deemed to be prospective unless by express provision or necessary implication it is given retrospective effect'. The acid test for ascertaining whether a statute or an amendment operates retrospectively or prospectively is the language of law which in itself is relevant. The principle of interpretation of a fiscal statute is "to remain within the four corners of the language of law". This has always been considered as the golden principle and has application on all type of fiscal statutes. He, therefore, reiterates that Income Tax Ordinance, 2001, cannot apply on the proceedings concluded under the Income Tax Ordinance, 1979 (repealed). He, however, adds that in his case Section 125-A does not apply for its particular and specific language. In his opinion, the language of Section 122(1) does not have any hearing on Section 122(5-A). This, in fact is a reply to the arguments of the department's side that since on the day of coming to operation of the 2001 Ordinance in Section 122(1), to word Section 59, 59-A, 62, 63 or 65 had already been included.
His point of view is that the provision of Section 122(5-A) having started from the language "subject to sub-section (9)" was not controlled by Section 122(1) which started with the language "subject to this section". On a query from the Court, he conceded that sub-section (9) of Section 122 is to be applied in respect of the cases covered by Section 122(5) as well. He, however, reiterates that since the language of a provision cannot be ignored besides superfluity and redundancy cannot be attributed to the legislature, the use of word 'subject to sub-section (9)' particularly and only in Section 122(5-A) cannot be ignored.
15. Another arguments from Mr. Ashiq Hussain is that the subsequent amendment cannot enhance the time-limit prescribed in Section 66A of Income Tax Ordinance, 1979 (repealed). In this regard (2005) 95 Tax 258 decided by High Court, Lahore, in the case reported as "Fawad Textiles Mills Ltd., Lahore Vs. Pakistan through Secretary Ministry of Finance and others" is referred. He says that under the old law; the limitation to assess the case under Section 66-A which is perimeteria to Section 122(5-A) of the Income Tax Ordinance, 2001, was 4 years. Income Tax Ordinance, 2001 has extended it to 5 years through Section 122(5-A).
16. The facts of this case, however, apparently are not in line with the facts of the case referred by him. Since in the referred case, the limitation had already expired before operation of Section 221 and (1-A) of Income Tax Ordinance, 2001 the same is distinguishable. Learned counsel for the respondent, also relies upon (1969) (20) Tax 1) in the case of "Income Tax Officer, Central Circle II, Karachi and another Vs. Cement Agencies Limited". The relevant portion of the judgment at page 10 reads as under- "The view that I have taken receives support from decision of the Court in Civil Misc. Petition No. K- 21 of 1968 (Works Co-operative Housing Society and another Vs. The Karachi Development Authority decided on the 20th January, 1969. In this case Lord the Chief Justice, in his judgment, referred to the decision of the Privy Council observed that even legislative measure like an Ordinance expressly given retroactive effect could not operate so as to annul a valid and existing judgment as before the parties whose rights had been duly determined and according to the which existed before the new Ordinance was passed."
He, therefore, prays that his case should be considered from the angle of its being barred by time as well Regarding the arguments that it is the law at the time of filing of- return which shall be applicable, he refers (2005 PTD 26) in the case of "Messrs Cargill Pakistan Seeds (Pvt.) Ltd. through Chief Executive Vs. Customs, Excise and' Sales Tax Appellate Tribunal through Assistant Registrar Lahore". In the said case, the law of limitation was statedly applied when the bill of entry were filed and the assessm ent made. The question, however, would not need much dilation before us for the reason that in all thereferred judgments at the time of enhancement in limitation, the earlier limitation had already expired. In such situation, there was no question of extension in life of the expired provisions. In any case, since the main issue before us is retrospectivity of the two provisions.
17. Mr. Siraj Khalid, Advocate, appearing in some PTRs for the taxpayer contends that the issue in hand was decided by the Tribunal with reference to the provision of Section 122(5) while the question has been framed presuming that Section 122(5-A) was applied: So, in his case, the same being incorrect must be rejected in limine. Arguing the issue and its legality, he said that in addition to the earlier arguments by his colleagues he wanted to add that under sub-section (5) of Section 122, assessm ent or an amended assessment shall only be further amended if under sub-section (1) of the said section, an order is treated as issued under Section 12Q or issued under Section 121 or under Section 59, 59-A, 62, 63 or 65. His emphasis remained that it is only that order which can be further amended which has been issued by the department earlier. The term 'issued' in his opinion means 'served' on the assessee, while, in presumptive income regime neither an order is framed nor issued. It was also added that C.B.R. itself issued a circular to say that for the old assessments, the provision of Income Tax Ordinance, 2001, should not be invoked.
18. Mr. Sajid ljaz Hotiana, Advocate, claims that the representatives in the cases which he is representing in the cases which he is representing were initiated on the basis of notices issued prior to 30.6.2003, hence, the ratio in "Kashmir Edible Oil Ltd. Vs. Federation of Pakistan" (supra) by the Hon'ble Supreme Court of Pakistan applies in full.
19. Mr. Umar Mahmood Kasuri, Advocate, while adopting the arguments of the respondent's side further adds that it is a case of application of two separate laws. Challenging the application of the new law on the proceedings concluded earlier, he says that since there is a complete law available for all pending matters in terms of the relevant provisions like 56, 66-A, 65 of Income Tax Ordinance,, 1979, there is no question of application on the said proceedings the provision of another law. He claims that it is not irk dispute that Income Tax Ordinance, 1979, even after renal is alive for all pending matters. The savings provided' in Section 6 of the General Clauses Act, as well as in Section 239 of Income Tax Ordinance, 2001, clearly cover the situation. It is the question of the application of the provision which came into existence on 1.7.20003 and, onward on the proceedings concluded earlier under another legislation. The other legal advisors as well as the respondent's counsels adopted the arguments of their respective colleagues.
20. Now we come to the actual issues in these petitions which we have mentioned in the earlier part of this order.
21. So far as issue No. 1 is concerned, the matter has already attained finality in terms of judgment in re: Kashmir Edible Oils Limited and others (supra), whereby the notices issued by Income Tax Department in respect of assessm ents finalized earlier on the basis of provisions of law added by afore-mentioned SRO 633(1)/2002, dated September 14, 2002, were declared void and illegal.
22. Section 122(5A) added by the Finance Ordinance, 2003 has not specifically been made retrospective. The department's argument that even before the said insertion the law in terms of Section 122 with all its sub-sections was comprehensive enough to cancel any of the already completed assessm ents does not appear correct. These provisions being substantive in nature could only apply prospectively. This has been held in a long line of judgments including Commissioner, Sindh Employees Social Security Institution and another Vs. M/s. E.M. Oil Mills and Industries Limited, reported as 2002 SCM R 39, Kashmir Edible Oil Limited (supra), Monnoo Industries Limited Vs. -Commissioner Income Tax (2001 84 Tax 26), Fauji Oil Terminal Vs. CIT, reported as 2006 PTD 734 decided by High Court, Karachi. The learned Legal Advisor's claim that these judgments are distinguishable and that the court was not properly assisted with regard to the language as was obtaining on the date of issuance of notices by ignoring the above SRO has not convinced us.
His contention would not need much dilation as Fauji Oil Terminal and Distribution Company, Karachi Vs. AC. Tax Officer-A Audit Division, Karachi (supra) has taken care of this situation. Not only the finding in the case of Honda Shahrah, Faisal Vs. Regional Commissioner I.T. was followed but it was further added that "sub-section (5A) of Section 122 of the Income Tax Ordinance, 2001 inserted with effect from 1.7.2003 is not applicable to the assessments finalized before 1.7.2003 because sub-section (5A) of Section 122 has no retrospective effect and therefore, the assessm ents finalized before 1.7.2003 cannot be reopened/revised/amended in exercise of jurisdiction under Section 122(5A) of the Income Tax Ordinance, 2001".
23. As already mentioned earlier, the provisions of Section 122(5) have also undergone many changes until it was finally amended so as to add the words "or repealed Ordinance" and certain other sentences in Fits sub-section to make the provision as pari materia with Section 65 of the erstwhile Income Tax Ordinance, 1979. Notwithstanding the arguments that even after insertion of the above language the provision is not retrospective, the original text had full tilt towards the claim of the taxpayers. This point has also been addressed by Karachi High Court in the reported judgment 2004 PTD 1173 in re: Allied Motors Limited Vs. Commissioner Income .Tax and others. The ratio is again very clear and unambiguous. It reads as follow:-- "We fully agree with the proposition of law varyably argued by Mr. Aqeel Ahmad Abbasi and hold that all the pending matters at the time of commencement of Income Tax Ordinance, 2001 are required to be decided in accordance with the provision contained in the repealed Ordinance, but by an income tax authority competent under the Income Tax Ordinance, 2001."
It does not need any detailed discussion to mention that the connotation 'pending' includes all such issues in which lis has started. Reference in that regard can be made to the case of "Messrs Bahria Oil Mills, Vehari Vs. Commissioner of Income Tax Zone, Multan" re: 2006 PTD 2421. The construction of Income Tax Ordinance, 2001 which came into operation on first day of July, 2002 applies in respect of tax year that starts from the said, date. The provisions of Section 122(5) as on date neither covered the assessm ents finalized under repealed Income Tax Ordinance, 1979 nor the operation of law was made retrospective in various corresponding provisions. The use of new terms like 'tax year', as against the earlier phrase 'assessment' and 'taxpayer' as against the word 'assessee' also have further titled the issue in favour of the taxpayer and against the revenue. For example Section 122(1) starts with the phrase "subject to this section" while in sub-section (2) it restricts the said amendment to only the assessments, which have been issued on the "taxpayer".
Taxpayer as already mentioned above is a new connotation and as per Section 2(66) of Income Tax Ordinance, 2001, it means "any person who derives an amount chargeable to tax under this Ordinance". Obviously the terms used in the above definition cannot mean and include any enactment beyond Income Tax Ordinance, 2001. A guidance in this regard can be sought from the case of "C./. T. Central Zone, Lahore Vs. National Security Insurance C. Ltd., Lahore" (2001 PTD 814)..
The construction of the provision before the amendment was very clear and unambiguous to the extent of its application from 1.7.2002 and onwards. Even the amendment through which in Section 122(1) the words "or issued under Section 59, 59-A, 62, 63 or 65 of the repealed Ordinance" were added does not help the revenue. For all practical purposes the phrase having been inserted in the present form w.e.f. 1.7.2003 cannot have implied effect of retrospectively, hence its application on the assessm ents finalized under Income Tax Ordinance, 1979 has rightly been held to be illegal. So far as addition of words "and the repealed Ordinance" and matching amendments in Section 122(5) through SRO 633(1)/2000 are concerned, the same also having been held to be as illegal are now non-existent.
24. The retrospectively of a provision of law is a settled issue. In this regard the settled principle is that unless the statute itself so provides in un-equivocal and clear terms a provision creating a charge or otherwise dealing with a substantive right cannot be made retrospective. The judgments which can be referred with advantage are (2004 PTD 38) in the case of "M/s. Innovative Trading Company Limited Vs. Appellate Tribunal and 2 others" (2005 PTD 2525) in the case of "M/s. Calibrative Heavy Industries (Pvt.) Limited Vs. CIT/WT Cays Zone-II, Lahore" (2007 PTD 67) in case, of "Federation of Pakistan Vs. Hail Muhammad Sadiq and others". In the last Mentioned case' it was held:-- "It is a settled principle of law that in the absence of clear intention of the legislature to apply a provision of statute with retrospective, effect it would be deemed that it would be applicable prospectively."
In the' case of "Commissioner Sindh Employees Social Securities Institution and another Vs. Messes E.M. Oil Mills and Industries Ltd, S.I.T.E., Karachi and 2 others" (2002 SCM R 39), it was held:-- "Retrospective effect of a statute. -- Every statute, as a general rule, is deemed to be prospective unless by express provision or necessary' implication it is given retrospective effect---Acid test for ascertaining whether a statute or an amendment operates prospectively or retrospectively is the legislative intent."
25. The judgment in the case of "M/s. Kashmir. Edible Oil Ltd. Vs. Federation of Pakistan" (2005 PTD 1621) clinches the issue. The relevant excerpts from the judgment are as follows:- "The cases used to be opened under the provisions of Sections 65 and 66-A of the Old law which had a narrow scope within the framework of the old Ordinance. They were not initially saved by the new law. But later were adopted through an amendment which, came about pursuant to Finance'
Ordinance, 2003 and effective from 1.7.2003 which corresponds to the date new law held in abeyance was also promulgated.
Prior to Ordinance of 1979, there was Income Tax Act of 1922 which had been repealed in the new law re-opening powers were saved under its Section 166(1)(c)(a). That this having not been done in the new amendment of 20'01, the intention of the legislature was absolutely clear that it had no intention of re-opening "the assessme nts completed under the old, law by using the powers under 2001 law.
Under Section 122 of the new law, the Commissioner exercises those powers. That the orders under reference were passed by the Deputy Commissioner and the Additional Commissioners and not by the Commissioner. That therefore, u/S. 122(2) these were not openable.
Sections 65 and 66-A of the repealed Ordinance of 1979 are in paramateria with the new sub- sections (5) and (5-A) of Section 122 enforced with effect from 1st of July, 2003 as these were not there prior. to. Finance Ordinance of 2003.
In Section 122(2), the word "taxpayer" is used. This word is defined by Section 2(66) of the. Income Tax Ordinance, 2001 and means any person who derives an amount chargeable to tax under the current Ordinance i.e. 2001. it was thus contended that Section 122 was never to have a retrospective effect.
A comparison of the relevant section of the repealed law and Section 122 of the present law shows a difference. Whereas, u/Ss. 65 and 65-A of the previous Ordinance, a lower grade official could reopen the, assessm ent, whereas: the new law has totally .vested the powers in the Commissioner. Its Section 122(2) reveals that the amendment to be made within the period prescribed, is confirmed to a taxpayer. The taxpayer is defined in Section 2(66) of the Ordinance and is confined to an assessee who can be assessed income tax under the new Ordinance.
Whereas, the petitioners-assessees could only be assessed under the previous Ordinance and not the present Ordinance."
Since while confirming above judgment, learned Supreme Court in re: Commissioner of Income Tax, Zone-C, Lahore and others Vs. M/s. Kashmir Edible Oils Ltd. and others (2006 SCM R 109) (supra) has not made any further comments, these findings have attained finality.
26. For all practical purposes there cannot be any doubt for the reason of the detailed dilation of the issues as above. However, to decide the issue once and for all it will be worthwhile that the provisions of Section 122 are again gone through after it came to its final shape on 1.7.2003. On the date it reads:-- "Section 122. Amendment of assessments.----(1) Subject to this section, the Commissioner may amend an assessm ent 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 alterations or additions as the Commissioner considers necessary.
(2) An assessm ent order shall only be amended under sub-section (1) within five years after the Commissioner has issued or is treated as having issued the assessment order. on the taxpayer.
(3) Where a taxpayer furnishes a revised return under sub-section (6) 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 return .shall be taken for all purposes of this Ordinance to be an amended assessm ent order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.
(4) Where an assessm ent order (hereinafter referred to as the "original assessment") has been amended under sub-section (1) or (3), the Commissioner may further amend, {as many times as may be necessary,} the original assessment within the latter of--
(a) five years after the Commissioner has issued or is treated as having issued the original assessm ent order to the taxpayer; or
(b) one year 'after the Commissioner has issued or is treated as having issued the amended assessm ent order to the taxpayer. {(4-A) In respect of an assessm ent made under the repealed Ordinance, nothing contained in. subsection (2) or, as the case may be sub-section (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 assessm ent order- passed under that section and the time limit specified in that section shall apply accordingly.}
(5) An assessm ent order in respect of tax year, or an assessment year, shall only be amended under sub-section (I) and an amended assessment for that year shall only be further amended under sub-section (4) where, on the basis of definite information acquired from an audit or otherwise, the Commissioner is satisfied--
(i) any income chargeable to tax has escaped assessment; or
(ii) total income has been under assessed, or assessed at too law a rate, or has been the subject of excessive relief or refund; or
(iii) any amount under a head of income has been mis-classified.} {(5-A) Subject to sub-section (9) the Commissioner may amend, or further amend, an assessment order, if he considers that the assessme nt order is erroneous insofar it is prejudicial to the interest of revenue:} [(5-B) Any amended assessm ent order under sub-section (5-A) may be passed within the time- limit specified in sub-section (2) or sub-section (4), as the case may be.}
(6) As soon as possible after making an amended assessment under {sub-section (1), sub-section
(4) or sub-section (5-A)}, the Commissioner shall issue an amended assessment order to the taxpayer stating--
(a) the amended taxable income of the taxpayer;
(b) the amended amount of tax due;
(c) the amount of tax paid, if any; and
(d) the time, place, and manner of appealing the amended assessment.
(7) An amended assessm ent order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of sub-section (1).
(8) For the purposes of this section, "definite information" includes information on sales or purchases of any goods made by the taxpayer, {receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance,} and on the acquisition, possession or disposal of any money, asset, valuable article of investment made or expenditure incurred by the taxpayer. {(9) No assessm ent shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard.}"
27. Before discussing the application of above provisions in its final shape on 1.7.2003, we are tempted to quote Mr. J. Rowlet in "Cape Brandy Syndicate vs. Inland Revenue Commissioner' (1921 KB. 69). He ruled:-- "it simply means that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax.
Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
28. Keeping above verse in view now we move on to the language reproduced by us above.
The first hurdle in invoking, jurisdiction under Section 122(1) lies in sub-section (2). It says that the assessm ent order shall only be amended under sub-section (1) within five years after the Commissioner (emphasis added) has issued or is treated as having issued the order. The orders under Section 59, 59(a), 62, 63 or 65 under the erstwhile Income Tax Ordinance have been issued by DCIT and not by the Commissioner while Section 122(2), restricts the possibility of amendment to the order of the Commissioner only. Needless to mention that the concept of "treated as issued" did not exist in Income Tax Ordinance, 1979 (repealed). It has been introduced for the first time in the new Ordinance of 2001, through Section 122(3)(a) and (b). Moreover, Commissioner can only amend the orders of the taxpayer' which under Section 2(66) means any person who derives an amount chargeable to tax under the Ordinance i.e. Income Tax Ordinance, 2001. In the old Ordinance of 1979 the term used for bringing to charge to tax to a person was 'assessee' whose assessm ent order obviously cannot now be amended under Section 122(1) for the, reason of the language of Section 122(2) Where only taxpayer's" order can be amended.
29. Section 122(3) is not relevant while Section 122(4) deals with further amendment of already amended assessm ent. Here again an assessment order under 1979 Ordinance cannot be termed as amended order. Section 122(4-A) protects the limitation provided in Section 65. Sections 122(5) and 22(5-A) if read in continuity -apply only to a 'taxpayer' and the assessments completed , by the Commissioner. The subsequent sub-section in terms of 122(6) also speaks of the amendment in the assessm ent order framed under sub-section (1), (4) or (5-A). Further that the amended assessm ent order shall be issued to the 'taxpayer'. It again does not say that the amended assessm ent order can be issued to an 'assessee' also. Section 122(7) says that an amended assessm ent order shall be treated in all respects to be an assessment order for" the purposes of this Ordinance. It also does not speak or give any impression as to its application. to- the assessm ent and its amendment for. the purpose of Income Tax Ordinance, 1979 (supra). Section 122(7) defines. the term `definite information' on which there cannot be any cavil since it is an inclusive definition. Here again the term used for the purpose of defining in the last part- is '"expenditure incurred to the taxpayer" and not the assessee. Its application on the assessment order under repealed Ordinance of 1979, therefore, is not established.
30.Lastly, Section- 122(9) while providing opportunity before amendment also speaks of the 'taxpayer' and we repeat that a 'taxpayer' does not and cannot include 'an assessee' under the erstwhile Income Tax Ordinance, 1979, having a distinct and separate definition in Section 2(66) of Income Tax Ordinance, 2001.
31. An assessm ent completed under Income Tax Ordinance, 1979 (repealed) is neither with regard to taxpayer" nor The assessing authority therein was Commissioner. All the terms used in above section are to amend the assessm ent order completed under the Income Tax Ordinance, 2001 passed by the Commissioner. The patch-Work in terms of additions of the words 'or assessed under Section 59, 59A, 62, 63 or 65 of the repealed Ordinance' have also not improved the language in favour of the revenue. The efforts even otherwise were unnecessary as the addition of the words through which the provisions of Section 122 were presumably extended for application on the assessm ents completed under Income Tax Ordinance, 1979 (repealed) was not at all required. The consistent view expressed by this Court in over half a dozens of judgments which has also been approved by the Supreme Court of Pakistan in Kashmir Edible Oil (supra) has not been followed by the revenue authorities. This way they have also lost the chance of applying the provisions of the repealed Ordinance on such assessments. The law has given them fully liberty to apply the provisions of Sections 65, 66A and 156 as the case may be. The obvious conclusion therefore, is that the assessm ent orders framed by the Deputy Commissioner of Income Tax cannot be amended or modified under any of the above two sections i.e. 122(5) or 122(5-A) of the Income Tax Ordinance, 2001 even for the reason of present construction of Section 122.
32. The language of Section 122 applies only to assessment orders finalized by the Commissioner of taxpayers for the tax year and not on assessment orders made by the DCIT for the assessment years 2002-2003 and earlier.
33. The orders of the Income Tax Appellate Tribunal, therefore, are unexceptionable. All the P.T.Rs. of the department are rejected.