' These four appeals are filed by taxpayer relating to tax years 2005 and 2006.
2. Facts of the case are that show cause notice was issued, for both the years, on 9-2-2008, which was followed by another notice dated 17-3-2008 under section 122(5A) of Income Tax Ordinance, 2001. Instead of replying to the show-cause notice, the taxpayer revised its returns for both the years on 6-5-2008. Ignoring the revised returns, A Taxation Officer continued with the action, proposed in the show-cause notice, and passed orders dated 28-6-2008, amending assessments taken to have been made under section 120 of the Ordinance of 2001. Taxpayer's appeals against order under section 122(5A) were rejected by Commissioner (Appeals). Besides filing appeals before this Tribunal against the rejection, appellant also filed a complaint before Federal Tax Ombudsman (FTO). FTO recommended for re-adjudication of the appeals by Commissioner (Appeals). Consequently, the appeals were heard again, orders dated 2-6-2010 were passed and taxpayer was given partial relief this time. Appellant has challenged these orders as well before us, in second set of appeals.
3. Learned counsel for the appellant contends that the assessment orders taken to have been made under section 120 of the Ordinance, 2001 stood amended under section 122(3)(b) on filing of revised returns and in effect the orders under section 120 were not in field. He, therefore, submits that Taxation Officer could not have passed the order dated 28-6-2008 under section 122(5A), without issuing fresh show cause notice. He argues; orders under section 122(5A) were without jurisdiction and are liable to be struck down. DR, who is assisted by Mr. Muhammad Azhar, DCIT, submits that under subsection (6) of section 114 the tax payer could not have revised its return after issuance of the show cause notice, therefore, Taxation Officer had lawfully proceeded under the original show cause notice. DR has further pointed out that second set of appeals against Commissioner (Appeals) order dated 2-6-2010 are not maintainable for the reason that Federal Tax Ombudsman had no jurisdiction to recommend for re-adjudication of an appeal already decided by Commissioner (Appeals). On a specific question whether the appeals filed against earlier orders dated 8-9-2009 by Commissioner (Appeals) were within time, reply of the DR is in affirmative.
4. We have examined the relevant law in light of the facts and arguments put forth by the parties.
Examination of the provisions of section 122(3) is necessary to answer the controversy therefore, same is reproduced:-- "122(3) Where a taxpayer furnishes a revised return under subsection (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 revised 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."
' Examination of the reproduce provision shows that taxpayer has been authorized, under this subsection, to revise its return and the legal effects of revising the return, as articulated, are that:-
(i) revised return shall be treated as amended assessment order made by Commissioner.
(ii) revised return shall be taken as amended assessment for all purposes of the Ordinance of 2001.
(iii) tax payable, shall be as set out in the revised return and
(iv) the amended assessm ent order shall be taken to be issued to the taxpayer on the day on which revised return was furnished.
' The above noted legal position leads to the conclusion that revising of return creates a right in shape of an 'amended assessm ent' and the Ordinance of 2001 recognizes it as such, for all purposes including the purpose of determining payable tax. The provision, in our opinion is substantive and the authority given to taxpayer for such amendment is a substantive right.
5. We have also examined subsection (6) of section 114. Subsection (6) was substituted by Finance Act, 2009 and certain conditions for filing revised return were added, including the one that it could only be revised if notice for amendment of existing assessment order was not issued. However, no such condition was there in subsection (6), before its substitution. Subsection (6), as it was before substitution, is reproduced:-- "114. Return of Income.-
(6) Any person who, having furnished a return, discovers any omission of wrong statement therein, may furnish a revised return within five years of the date that the original return was furnished."
In our opinion, the substituted subsection (6) of section 114 could not be given retrospective effect because it curtails the right vested in the taxpayer, by section 122(3), to cure or amend his earlier declarations given in original return. We are fortified in our view by law laid down by Apex Court.
Honorable Supreme Court of the county, while quoting its earlier judgment has held in Zakaria H.A.
Sattar Bilwani's case reported as 2003 PTD 52 (SC):--
(6) Admittedly, the question was of very important/vital nature, therefore, it may have been attended to, keeping in view the provisions of Finance Act (VII of 1992) in pursuance whereof section 17-B was inserted after section 17-A in the Wealth Tax Act, 1963 and the Finance Act was applied at once as per its section 1. The learned High Court may have examined the question of the application of section 17-B Wealth Tax Act, 1963 concerning its effect retrospectively or prospectively by applying the principle of interpretation of statutes namely where any statute effects substantive right it would operate prospectively unless by A express enactment or necessary intendment, retrospective operation has been given. This Court elaborately examined identical question in respect of section 2 as amended by Banking Companies (Recovery of Loans)
(Amendment) Act (XVIII of 1992) in the case of Malik Gul Hassan and Co. And 5 others v. Allied Bank of Pakistan (1996 SCMR 237). Relevant para. Therefore is reproduced hereinabove for convenience:-- "(7) It is well-settled principle of interpretation of statute that where a statute affects a substantive right, it operates prospectively unless by express enactment or necessary intendment retrospective operation has been given Muhammad Ishaq v. State PLD 1956 SC (Pak.) 256 and State v. Muhammad Jamil, PLD 1965 SC 681. This principle was affirmed in Abdul Rehman v.
Settlement Commissioner (PLD 1966 SC 362). However, statute, which is procedural in nature, operates retrospectively unless it affects an existing right on the date of promulgation or causes injustice or prejudice to a substantive right....."
' Nothing is found to have been expressed in the substituted subsection (6) that it shall apply retroactively. General principle that an enactment shall not apply retroactively to take away existing or completed rights shall prevail in this case. The right to revise return was unconditional on 6-5-2008 (when returns in this case were revised), hence the conditions D ordained by substituted subsection (6) of section 114 should not have been applied retrospectively.
7. So far appeals against Commissioner (Appeals) order dated 2-6-2010 are concerned, DR's objection on jurisdiction of Federal Tax Ombudsman needs consideration in light of relevant law i,e, Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 ("FTO Ordinance, 2000").
Preamble of this Ordinance reveals that the Office of Federal Tax Ombudsman was established "to diagnose, investigate, redress and rectify any injustice done to a person through maladministration by functionaries administering tax laws". This objective of the Ordinance was reaffirmed in subsection (4) to section 9 of FTO Ordinance, 2000, where Office of FTO is assigned a function to arrange for studies or research "for ascertaining the causes of corrupt practice and injustice" and recommend appropriate steps for their eradication. Maladministration is defined section 2(3), the definition focuses on the acts of omission or commission by the functionaries administering tax laws which are tainted with mala fide, corrupt or improper motive, whereas bona fide acts of omission or commission for valid reasons are excluded from the definition. Office of FTO, under section 9, can investigate any allegation of maladministration. If the investigated allegations of maladministration are found correct, FTO shall communicate its finding with a recommendation to Revenue Division under section 11(1). Revenue Division shall take action, under section 11(2) on the recommendation, and shall inform the FTO or shall inform about the reasons of not taking action. If Office of FTO feels that reasons for not taking action are not convincing, he can refer the matter to President as "Defiance of Recommendation".
' Examination of the FTO Ordinance, 2000, does not suggest, anywhere, that it is a forum parallel to a Court of competent jurisdiction or to an Appellate Tribunal. Object of this Office is to identify the maladministration, by functionaries administering tax laws, and make recommendations for eradication or redress of grievance. The recommendation is not an order in itself, changing legal status of acts of omission or commission. Rather the action oh the recommendation is to be taken by the Revenue Division, which is authorized also not to take action and inform about the reasons of not taking action. On the contrary, order of a Court or Tribunal changes the legal character of impugned order and respondents can only seek remedy in accordance with law.
8., Jurisdiction of the FTO to investigate' the allegation of Maladministration is codified in the sections 9(1) and (2), same are reproduced hereunder for facility;
9. Jurisdiction, functions and powers of the Federal Tax Ombudsman:
(1) Subject to subsection (2), the Federal Tax Ombudsman may on a complaint by any aggrieved person, or on a reference by the President, the Senate or the National Assembly, as the case may be, or on a motion of the Supreme Court or a High Court made during the course of any proceedings before it or of his own motion, investigate any allegation of maladministration on the part of the Revenue Division or any Tax Employee.
(2) The federal Tax Ombudsman shall not have jurisdiction to investigate or inquire into matters which:
(a) are subjudice before a court of competent jurisdiction or tribunal or board or authority on the date of the receipt of a complaint, reference or motion by him; or
(b) relate to assessm ent of income or wealth, determination of liability of tax or duty, classification or valuation of goods, interpretation of law, rules and regulations relating to such assessment, determination, classification or valuation in respect of which legal remedies of appeal, review or revision are available under the Relevant Legislation.
' Power to investigate the allegation of maladministration is subject to subsection (2) which is couched in negative language to restrict such investigation from encroaching upon the quasi- judicial powers invested in the authorities under the relevant laws. Clause (a) of the subsection (2) precludes such investigation in matters which are subjudice before a court of competent jurisdiction, Tribunals, Board or Authorities. Clause (b) provides detail of the functions undertaken for determining a tax liability against which, legal remedies of appeal, review or revision are available under the Relevant Legislations. Such matters are also excluded from the jurisdiction of FTO. We may point out here that earlier order of Commissioner (Appeals) dated 8-9-2009 falls squarely under Clause (b), as it upheld the assessment made by taxation officer and appeal against this order was available before this Tribunal. FTO's recommendation of re-adjudication was also hit by clause (a), because appellant had filed appeal before this Tribunal, therefore, the order was sub-judice before the Tribunal when FTO investigated the same.
9. To conclude, it is held that recommendation of the FTO to re-adjudicate was coram non judice, hence the subsequent proceedings (re-adjudication) and order dated 2-6-2010 is nullity in the eye of law. Appeals against a nonexistent order are dismissed.
' The appeals against order dated 8-9-2009 are accepted and assessment for both the years as revised by taxpayer shall hold the field.