The taxpayer has challenged Commissioner (Appeals)'s decision of dismissing its appeals against order under section 205 of Income Tax Ordinance 2001, holding the same as incompetent before him, because section 205 was not mentioned, at relevant time, in the appeal provisions contained in section 127 of the Ordinance, 2001. The order impugned before us was, therefore, passed without dilating upon merits on 24-3-2009.
2. As an important legal issue was involved, therefore, department requested for appointment of Legal Advisor, who is present today and is prepared to argue. Learned counsel for the appellant argued his case on a previous date, but sought adjournment on last date of hearing. Today, no one is present for the appellant and there is no request for adjournment. We, however, intend to proceed with the case on merits despite absence of representation from appellant side.
3. It is admitted position that section 205 was not mentioned as appealable section in the provisions of section 127 of Income Tax Ordinance, 2001 which was inserted through Finance Act, 2009. During argument, made on a previous date, learned counsel for the appellant, referred to the last part of subsection (1) to section 127 where it is provided that an order increasing liability of a person can be challenged before the Commissioner (Appeals). He argued that order under section 205 did have the effect of increasing liability of the appellant therefore, it was wrongly non-suited.
He also submitted that insertion of section 205 in subsection (1) to section 127 through Finance Act, 2009 was clarificatory in nature. He emphasized that a person cannot be left remediless and relied on the basic doctrine of law that "there is no wrong without a remedy." The Legal Advisor supported the order of Commissioner (Appeals) and submitted that insertion of section 205 in section 127(1) itself was supporting the legal position that an order under section 205 was not appealable before the Commissioner (Appeals) at the relevant time, therefore, requested for dismissal of appeal.
4. We have heard learned counsel for both the parties. Before examining their contentions, it would be beneficial to have a glance on the provisions of the section 205, interpretation of which is required for disposal of these appeals..
"127. Appeal to the Commissioner (Appeals). ---(1) Any person dissatisfied with any order passed by a Commissioner or a taxation officer under sections 121, 122, 143, 144, T162,1 170, 182, 183, 184, 185, 186, 187, 188, or 189, or an order under subsection (I) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (0 of subsection (3) of section 172 [declaring] a person to be the representative of a non-resident person, . Or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person, may prefer an appeal to the Commissioner (Appeals) against the order."
The underlined portion of the above quoted provision shows that appeal under this section is not restricted to the sections specifically mentioned in this subsection. It is envisaged that an order, (i) having the effect of enhancing the assessment, or (ii) reducing a refund, or (iii) otherwise increasing the liability of person, can be challenged in appeal before the Commissioner (Appeals).-It is also note able that the legislature has used the word "or" instead of the word "and" in the underlined portion of the provision which makes it disjunctive and operate able independently from other part of the provision. Meaning thereby an order though not passed under any of the specific section, can be challenged if it has the effect of enhancing the assessment.
Similarly, an order which has the effect of reducing a refund can also be challenged and an order which though may not have effect of enhancing the assessment or reducing a refund but otherwise increases liability of a person can also be challenged under the provisions of the section
127. In our opinion, the words "otherwise increasing the liability of the person" have a wider connotation and the increase in liability can be in any form i,e, as tax, penalty or additional tax. We, therefore, hold that the narrow interpretation made by Commissioner (Appeals) in the impugned order is not sustainable being against the expressed provisions of subsection (1) to section 127 of Income Tax Ordinance, 2001.
5. We are also convinced by the argument of learned counsel for the appellant that the insertion of section 205 in subsection (1) to section 127 through Finance -Act, 2009 was clarificatory in nature.
Before dilating on this aspect, perusal of the following subsections of section 205 is relevant; "205. Additional tax.-
(3) The Commissioner shall make an assessment of any additional tax imposed under this Part in accordance with the provisions of Part H of this Chapter as if the additional tax were tax.
(6) The provisions of Parts-III and IV apply to an assessment of additional tax as if it were an assessm ent of tax"..
' The provisions contained in subsections (5) and (6) to section 205 support this legal position.
Subsection (5) envisages that the Commissioner shall make the order under section 205 in accordance with the provisions of Part-II of this Chapter. Section 205 is contained in Chapter-X under the heading of "Procedure" and its Part II is captioned as "assessment". It means the procedure of passing an order under section 205 shall, be the same as is of passing assessment orders under sections 101 to 126. Subsection (6) to section 205 envisages that provisions of Parts-III and IV shall apply to an order under section 205 as if it were an assessment of tax. Part-III to Chapter4X deals with appeals whereas its Part-IV is captioned as "Collection and recovery of tax".
Needless to say that subsection (6) directs to recover the additional tax under Part-IV of Chapter-X and to file appeal against order under section 205 under Part-III which also contains section 127. In presence of subsections (5) and (6) to section 205, we. Are of the considered view that an order, under section 205 was appeal able before the Commissioner (Appeals) even before the insertion of section 205 -in subsection (1) to section 127 and that the insertion through Finance Act, 2009 was clarificatory in nature. We may refer to well established and cardinal principle of interpretation that no provision of law can be interpreted in isolation rather a collective and harmonious construction of law is required.
6. In view of the above, the order passed by the Commissioner (Appeals) dated 24-3-2009 is held to be against the provisions of law, therefore, the same is vacated. The appeal filed by the taxpayer before Commissioner (Appeals) shall deem to be pending and Commissioner (Appeals) is directed to decide the same on merits.
' Appeals are allowed accordingly.