' The appellant through this appeal has objected against the order dated 21-9-2010 passed by the Additional Commissioner under section 66A of the repealed Ordinance, 1979 on the following grounds:-- "(2) That the learned ACIR-E erred to pass an order under appeal after expiry of time limit provided in section 66A of the Income Tax Ordinance, 1979.
(3) That the learned ACIR-E failed to appreciate the honourable SC in judgment cited as (2009) 100 Tax (SC Pak) has only made observation with respect to continuation of repealed section 239(1) of the Ordinance i,e, the repealed law to continue to apply for assessments up to Tax Year 2003 but the apex court nowhere extended the prescribed time limits for initiation and conclusion of proceedings and therefore, time limit prescribed in respective section i,e, section 66A of repealed Ordinance needs to be observed.
(4) That the learned ACIR-E erred to conclude that order passed under section 62 of the Income Tax Ordinance, 1979 was erroneous and prejudicial to the interest of revenue.
(5) That the learned ACIR-E erred to pass order under section 66A of the repealed Ordinance without having jurisdiction delegated. To him for this purpose by the Commissioner."
2. Brief facts of the case leading. To the rising of the impugned order as mentioned on the record are that the return of income were filed by the assessee where upon the assessment order under section 62 was framed on 28-6-2005 subsequently the relevant case record of the assessee was called for and examined and it was found by the Taxation Officer that the order framed by the DCIT was erroneous and prejudicial to the interest of revenue. The Taxation Officer in order to resort to suitable remedial action to retrieve a loss of revenue invoked the authority under section 66A of the repealed Ordinance, -1979 read with section 239 of the Income Tax 'Ordinance, 2001 and issued notice on 22-6-2010. The Taxation Officer in this regard placing reliance on the A decision of the honourable Supreme Court of Pakistan reported as 2009 SCM R 1279 = 2009 PTD 1392 has taken the cognizance despite the fact that the limitation provided under the law has already been expired.
According to the Taxation Officer the honourable Supreme Court has held that section 122(5A) was not applicable to assessm ent years relevant to the periods ending 30-6-2002 as the same were governed by the repealed Income Tax Ordinance, 1979. So, the honourable Supreme Court of Pakistan has closed forever the possibility of application of section 122(5A) for various assessment years up to assessm ent year 2002-2003 according to him whereas simultaneously the window of action under section 66A was opened as per judgment of the honourable Supreme Court of Pakistan referred above without any bar of limitation.
3. The learned counsel representing the appellant has strongly contested the view taken by the Taxation Officer/Additional Commissioner. He has contended that the Order under section 62 in the present. Case for the assessm ent year under review i,e, 2002-2003 has been passed under section 62 of the repealed Ordinance, 1979 on 28-6-2005 and the notice under section 66A have been issued by the Additional Commissioner on 22-6-2010 and the Order has been passed on 21-9-2010 placed reliance on the decision of the honourable Supreme Court of Pakistan which has been passed on 22-6-2009 and there is 15 months period between the order passed under, section 66A and the referred order of the honourable Supreme Court of Pakistan. The learned counsel referring subsection (2) of section 66A of the Ordinance, has contended that no order under subsection (1) of section 66A shall be Made after the expiry of four years from the date of order short to be revised. In this regard the learned counsel has also referred the relevant paras. 54 and 57 of the above referred order of the honourable Supreme Court of Pakistan which are reproduced here under:-- "(54) A perusal of section 65 of the repealed Ordinance shows that a period of five years was provided for issuing notice to an assessee to initiate proceedings for additional assessment in the cases of escapement of income from assessment etc. Time-limit of five years, with certain changes is also envisaged under subsections (2) and (4) of section 122 of the Ordinance within which power to amend an assessm ent may be exercised. Keeping the former and the present states of law in view, the irresistible conclusion appears to be that the assessments completed under the repealed Ordinance ought to be governed by the old law while the assessments .Of the post-enforcement period of the Ordinance are to be governed by the new law. This treatment of the two sets of assessm ents would also avert the anomaly that would be created if the assessm ents of the period up to 30th June, 2003 were excluded from the operation of the previous law on account of its repeal, and not included in the new law on account of its being, prospective in application. It appears that the respondents have been trying to take advantage of the technicalities, but we are afraid they must fail. If their cases do not tall within the ambit of provisions of section 122 on account of the same being prospective, they cannot exclude their assessm ents from the purview of section 65 of the repealed, Ordinance merely because of the lapse of the, draftsman who omitted subsection (1) of section 239 at the amendment stage. Had the provisions of subsection (1) of section 239 of the Ordinance continued on the statue book, there would have been no ambiguity and no difficulty at all. In that eventually, the assessments up to the period ending on 30th June, 2002 would be governed by the relevant provisions of the repealed Ordinance as if the Ordinance had not come into force."
(57) In the light of the above discussion, we uphold view of the Sindh High Court taken in Honda Shahra-e-Faisal and followed by the other High Courts as also the Income Tax authorities that the provisions of section 122 of the Ordinance are prospective in their application and do not apply to the assessm ent of a year ending on or before 30th June, 2002. On that account the appeals are, bound to fail and the impugned judgments would be upheld. However, the learned High Courts have not adverted to the question of treatment of assessments of the period preceding the enforcement of the Ordinance. As already noted section 65 of the repealed Ordinance provided a period of five years for additional assessment and such assessments were to be dealt with under the said provision in accordance with original section 239(1) of Ordinance. The learned High Courts failed to take into consideration this aspect of the matter and did not direct that the assessments completed under the repealed Ordinance would be subject to the provisions of the said Ordinance as originally provided in unamended section 239(1), but not clearly and properly provided in the Ordinance at the amendment stage. We fill this lacuna in the impugned judgments and direct that the assessm ent of any year ending on or before 30th June, 2002 would governed by the repealed Ordinance and shall be dealt with as if the Ordinance had not come into force. In taking this view, we are fortified by a passage from the Maxwell on Interpretation of Statutes, 10th Edition (1953); p.228, which reads as under:-- "Where rights and procedure are dealt with together the intention of the legislature may well be that the old rights are to be determined by the old procedure and that only the new rights under the substituted section are to be dealt with the new procedure."
4. The learned counsel has contended that in whole of the judgment of the honourable Supreme Court of Pakistan the section 66A has nowhere been referred and in the above referred two paras, the section 65 of the repealed Ordinance. 1979 has been referred and all the observations of the honourable Supreme Court of Pakistan are regarding the orders passed under section 65 of the repealed Ordinance, 1979 and no observation is regarding 66A. The learned counsel has contended that placing reliance on the decision of the honourable Supreme Court of Pakistan by the Taxation Officer is misinterpretation as the honourable Supreme Court of Pakistan has never referred regarding application of Section 66A nor has given any direction regarding condo nation of delay in respect of limitation provided under the law for the application of section 66A or any other section of the repealed Ordinance. The Taxation Officer in this case has admittedly issued notice after the expiry of time limit provided in section 66A. According to learned A.R even otherwise order passed by the DCIT under section 62 was neither erroneous nor prejudicial to the interest of revenue.
5. On the other hand the learned D.R. Is supporting the impugned order. He has contended that the honourable Supreme Court of Pakistan has decided the issue in favour of the revenue and the assessee s attempt to take 'advantage on technicalities has been disapproved. He has contended that the honourable Supreme Court of Pakistan has taken the cognizance of the drafters laps by not saving the relevant Section of the repealed Ordinance, 1979 in section 239(1) of the Ordinance, 2001 and has made the directions in order to removing the difficulty for invoking proper provisions of law i,e, repealed Ordinance, 1979 and it has been held as if the same even not saved under section 239(1) of the Ordinance, 2001 deemed to be saved for the purpose of assessment years relevant to various periods till 30-6-2002. The learned D.R is of the view that the appellant in this case is again making a new effort to escape of revenue on the basis of technicalities which has already been disapproved by the honourable Supreme Court of Pakistan. He is of the view that the above referred order of the honourable Supreme Court of Pakistan has provided sanction for invocation of section 66A and department cannot be restrained to invoke the said Section on the technical grounds of time limitation. The learned D.R. Has admitted that no petition was filed before the honourable Supreme Court of Pakistan in respect of the present case against the decision of the honourable High Court. But according to him it is immaterial when the matter has been finally decided by the apex court in favour of the department on the issue for said assessment years as per similar facts on record. He has contended that once it has been held by the honourable Apex Court that the relevant provisions of law to retrieve lawful revenue or to be construed as the same are saved in section 239 of the Ordinance, 2001 then the saving is for all purposes of the Ordinance, 2001. He is of the view that the honourable Supreme Court has discussed in detail the provisions of section 122(5A) which are similar to section 66A of the repealed Ordinance, 1979 and therefore this Section will also be taken specifically saved in section 239 of the Ordinance. He has contended that the drafters laps as referred by the honourable Supreme Court of Pakistan are regarding section 66A and not regarding section 65 of the repealed Ordinance, 1979 which was already saved in section 239 of the Ordinance. He has requested for the rejection of the appeal filed by the assessee.
5A. We have considered the contentions made from both the sides and have also perused provisions of relevant section 66A and the decision of the honourable Supreme Court of Pakistan.
We have found that the said section has specifically provided time limits of four years for amending the order passed by Assessing Officer considered to be erroneous in so far as prejudicial to the interest of revenue by using the word "shall" making limitation mandatory. Even otherwise while perusal of the above referred order of the honourable Supreme Court of Pakistan, we have nowhere found that the honourable Supreme Court has condoned the limitation period in any of the matter nor discussion is regarding the provisions of section 6A of the Ordinance, which are totally different from section 65 of the repealed Ordinance 1979. We have found that only in para 53 while referring the arguments of the representative of the department the section 66A has been referred only for the purposes of distinguishing the application of section 122(5A) of the Ordinance, 2001. We have nowhere found in this judgment of the honourable Supreme Court of Pakistan holding that any provisions of law can be invoked outside the time limit provided under the law in para.54 of the judgment while referring various cases the section 66A has been referred but the reference in this regard in no way helps the department as neither any direction in this regard has been given nor any observation is regarding the condo nation of the time limitation provided under the law. In this case admittedly the original order under section 62 of the repealed Ordinance, 1979 have been passed by the DCIT on 28th June, 2005. While the order under section 66A mentioned at the title of the order under section 66A of the Income Tax Ordinance, 2001 and also in the concluding para mentioning the order being amended under section 122(5A) of the Ordinance, 2001; has been passed on 21-9-2010. While under subsection (2) of section 66A of the repealed Ordinance, 1979 the invocation of the said section 66A have become barred by time on 28-6-2009 and the notice under section 66A has been issued on 22-6-2010 despite the facts that the above referred decision of the honourable Supreme Court of Pakistan, on the basis of which the order under section 66A by the Additional Commissioner has been passed with the observation that this order is being passed in appreciation of the verdict of the Honourable Supreme Court of Pakistan and the date of the order has also been mentioned in next para as 22-6-2009. We therefore find force in the contention made by the learned counsel for the appellant that the order being passed after the time period provided under the mandatory provisions of law is Without any jurisdiction and is therefore cancelled. The appeal filed by the assessee is allowed.