IFTIKHAR MUHAMMAD CHAUDHRY, C.J. - Above appeals are by leave of the Court against judgments description whereof has been given in the title Of judgment, passed by the Lahore High Court, Lahore.
2. We have heard the parties counsel and have gone through the impugned judgment carefully.
3. The learned Attorney General for Pakistan under instructions stated that C.B.R, or its authorized representatives are ready to abide by the observations made by the High Court in the impugned judgment in respect of issuing fresh notices to the respondents but the learned High Court has made certain observations which are detrimental both in the interests of the C.B.R, as well as the respondents, therefore, if the same are set aside or expunged then it would be convenient for both the sides to agitate their claims according to the terms of Section 177 of the Income Tax Ordinance, 2001, as it stood at the relevant time. He pointed out following observations from the impugned judgment:- "against the assessee because his assessment order is to be reopened and declaration in the return to be scrutinized which is an order adverse to the provisions of Section 120 of the Ordinance (ibid)"
(8) Learned counsel for the respondents attempted to negate the assertions of the petitioners by urging that no notice is needed before representative under Section 177 of the Ordinance, because by the exercise of audit, no prejudice is caused to the assessee. Though this contention has no substance in it and cannot be accepted even on its face value because general audit of a person does result in prejudice to the assessee as he becomes subject to scrutiny even regarding his meals and wearing yet the law itself provided that the return filed by the assessee would amount to an' assessm ent order and when the Department opts to reopen the case for scrutiny/audit/detailed analysis, a notice to the assessee has to be given before proceeding adverse to his interest, in spite of absence of specific provision of notice, in the said law. Law regarding notice to the concerned party is settled by this time and the superior judiciary of country is consistent on the question of giving notice to the concerned persons before proceedings against him, besides the applicability of principles of natural justice whereunder no one is to be condemned unheard. The Hon'ble Supreme Court of this country has very graciously mandated that provision of, notice to the person against you propose to proceed, has to be read in every statute irrespective of the fact that no such provision is incorporated therein. Reference in this behalf can be conveniently made to a chain of judgments, a few of those are in the cases of Mst.
Sattan and others v. Group Captain Masroor Hussain,- Officer Commanding, P.A.F. Station, Sargodha Cantt (PLD 1962 Lah. 151), Abdul Rashid v. Government of the Punjab through the Chief Conservator of Forests, Lahore and 2 others (1985. CLC 199), Mst. Abeda Begum v. Government of Pakistan and others (1985 CLC 2859), Muhammad Tufail v.' Government of Punjab (1990 Law Notes (Lah.) 138), Gul Muhammad and 8 others v. Buxal and 2 others (1991 CLC 229), Messrs Murree Brewery Company Limited v. Director General, Excise and Taxation and 3 others (1991 MLD 267), Fateh Muhammad v. Mushtaq Ahmad and 9 others (1981 SCMR 1061) and Mst. Zahida Sattar and others v. Federation of Pakistan and others (PLD 2002 SC 408).
The press release, dated 13.5.2004 issued by the Central Board of Revenue subsequent to the filing of the returns by the assessee is' of no legal consequence as it could not work retrospectively, as those were not in the knowledge of the assessee the time of filing of their returns. Reference in this behalf can be made to the judgments of this Court in the cases of Sadiq Brothers Poultry, Rawalpindi v. Additional Commissioner, I.T./W.T. Rawalpindi (2004 PTD 122 and 2003 PTD 1780). In both these cases, the circular issued by the Central Board of Revenue specifying certain categories of the assesses whose cases were selected for specifying certain categories of the assesses whose cases were selected for special audit for the assessment year 1998-99 were held to be unjustified and it was ruled that all the categories of assesses should have been given information well before filing of their returns under the "Self- Assessment Scheme" with an added finding that . Such circular after filing of self-assessme nt returns are illegal exercise of discretion vesting in the revenue authorities.
Learned counsel appearing for the respondents stated that they have no objection if above observations are expunged or set aside and appeals are disposed of in terms that appellants may issue notices to the respondents in terms of Section 177 of Income Tax Ordinance, 2001, as it was applicable at the relevant time, disclosing criteria/reasons of selecting their cases for the purposes of audit, It is also pointed out- that in some of the cases the C.B.R, had issued Circular No. 1(l)S(ITAS)/2004, under which returns have been revised and payment of tax was made, therefore, in such cases, observation for issuance of fresh notices will be issued.
4. The learned Attorney-General raised no objection and stated that in those cases no further proceedings under Section 177 of the Ordinance, shall be initiated against them.
5. In view of the above arrangement between the parties, the appeals are" disposed of with consent, consequently, the portions of impugned judgment reproduced hereinabove are deleted with the observation that let appellants issue fresh notices to the respondents in terms of Section 177 of the Ordinance, as it was prevailing at the relevant time, disclosing criteria/reasons for selecting their cases for purpose of audit. As far as the cases in respect whereof observations have been made hereinabove relating to Circular C. No. 1(l)/S(ITAS)/2004 or otherwise if the returns have been revised and payment has been made by the assessee no further action shall be taken against them. The parties are left to bear their own costs.