1. This 2nd miscellaneous application has been filed by the department for the rectification of the Tribunal's order passed in I.T.A. No.279/IB/2010 dated 31-3-2010 for the Tax year, 2003.
2. Brief facts of the case are that the original assessment completed under section 121 of the Income Tax Ordinance, 2001 was confirmed by the first appellate authority which was set aside by the Tribunal with the directions that opportunity of being heard be provided to the taxpayer. The Taxation Officer received a complaint on 10-5-2003, that the taxpayer purchased properties in the name of minors: Therefore, addition under section 111(1)(b) was made in the tax year 2003. The learned CIT(A) deleted the addition that the discovery did not relate to the tax year 2003 because the discovery was made on 11-12-2004 i.e. Tax year 2005 as per notice dated 11-12-2004 issued by the Taxation Officer. Being aggrieved with the treatment the department filed appeal before the Tribunal. The Tribunal observed as under:-- After hearing both the rivals parties and considering the legal aspects of the case, it is strange to note that complaint .Was received on 10-5-2003 and alleged notice under section 114(4) was issued on 12-4-2004 i.e. After eleven months. As per grounds of departmental appeal department itself remained silent almost for one year. Taxpayer's contention is that no notice dated 12-4-2004 was ever received by him. I have perused assessment order which does not find mention of any notice dated 12-4-2004 rather notices embodied in assessment order are 13-1-2009, 22-1-2009, 4- 2-2009, 23-2-2009 and 24-3-2009. So department contention is not supported by assessment order itself. I am of the considered view that the addition made under section 111(1)(b) does not relate to the tax year 2003 because the discovery was made on 11-12-2004 i.e. Tax year 2005 as per notice dated 11-12-2004, the findings recorded by the learned CIR(A) is justified and on sound footings. Therefore, I find no warrant for interference in the impugned order of the learned CIR(A) which is upheld and the appeal filed by the department is dismissed.
3. Being aggrieved with the treatment mentioned out by the Tribunal the department has file 1st miscellaneous application for rectification on the following grounds:--
(a) Originally a complaint was lodged on 10-5-2003 which means that the discrepancy discovered and addition was rightly made as per prevailing law for Tax Year 2003.
(b) Accordingly as per prevailing law the assessment was rightly framed in tax year 2003 i.e. The period in which it was discovered by the Commissioner as words "immediately preceding the financial year" were inserted by Finance Act, 2004 i.e.f. July 1, 2004.
(c) Since the taxpayer has been paying income tax for the last so many years hence proceedings to finalize the assessm ent for Tax Year 2003 were initiated as no return was filed.
(d) Without having any prejudice to the above, the contention of the taxpayer that no notice dated 12-4-2004 was ever received by him is not based on fact as notice under section 114(4) of the Income Tax Ordinance, 2001 dated 12-4-2004 was duly served upon the taxpayer himself and the said notice is available on assessme nt record which is an irrefutable fact that notice under section 114(4) dated 12-4-2004 was duly served upon the taxpayer.
4. That the said application was rejected by this Tribunal vide M.A (R) No.101/IB/10 dated 15-12-2010 after detailed discussion on the grounds taken in the said rectification application while deciding the said application following observation were made.
2. "Undoubtedly Bench has to draw inference keeping in view the probabilities of fact, learned DR has failed to establish that there is a mistake floating on the surface of the impugned order, which could be rectified without any further investigation or evidence. The requested rectification filed by the department amounts to re-appraisal of facts and law. There is no rectifiable mistake in the Tribunal impugned order because it had been issued after proper application of mind and taking into account submissions made at bar by both the parties. All the issues involved in the case had thoroughly dilated upon in the light of material available in the record and all the submissions made by both parties were properly taken into account before arriving at final conclusion. In fact section 221 of the Income Tax Ordinance, 2001 gives very limited power/scope to rectify only mistake apparent form the record. In support thereof, I would like to refer the decisions of the superior courts reported as 1992 SCM R 687 = 1992 PTD 570, 2002 PTD 306 (H. C. Karachi) and 2007 PTD 967 (S.C. Pak) wherein it has been held that only those mistakes which are floating on surface of record can be rectified and rectification should not be made in the cases where re-appraisal of facts or re-adjudication of the issue in dispute is involved.
3. For what has been stated hereinabove narrated facts and particularly keeping in view the above referred decisions of the superior courts, the instant miscellaneous application of rectification filed by the department is rejected.
4. Now the department again filed another miscellaneous application on the following grounds for the same tax year:---
(i) That a complaint was received on 10-5-2003 for which documentary evidence (i.e. Copy of envelope and complaint duly bearing date of its receipts), is enclosed. (Annexure-H).
(ii) That subsequently, assessm ents for Assessment Years 2000-2001 to 2002-2003 were made on 28-6-2004. The then Assessing Officer has recorded in the office note/foot note that a complaint was received during the proceedings of the above referred assessments. The contents of the above said complaint as given in the Foot Note are exactly the same as in the complaint under question. A copy of above referred order dated 28-6-2004 is also enclosed (Annex-1). It is an additional evidence that the complaint was received prior to 28-6-2004; thereby meaning that discovery of information took place prior to 28-6-2004 and not on 11-12-2004 i.e. Tax Year 2005 as held by the ATIR.
5. (i.e) That first notice was issued on 12-4-2004, a copy of which is also enclosed for perusal (annex- J). Although the above referred notice is not mentioned in the body of order for tax year 2003 but the above said notice is available on record and as such is part of proceedings conducted regarding Tax year 2003. The above referred notice was duly served upon the taxpayer as signatures of the recipient are available on the above referred notice. Accordingly the taxpayer's plea that no notice dated 12-4-2004 was received by him is not correct.
(iv) All the above mentioned facts make it abundantly clear that the information relating to complaint was discovered by the Commissioner (department) on 10-5-2003 pertaining to Tax year 2003.
6. From the above mentioned grounds it transpired that the department had taken new grounds and facts and requested for rectification through this 2nd application.
7. Learned DR states that point raised in the application are very important and need to be considered. He argued that mistakes pointed in the application are apparent form the order of the Tribunal and can be rectified.
8. On the other hand learned representative of the respondent opposes the arguments of the learned DR and states that now those facts were taken in this application which is not part of the previous proceedings and they are new and cannot entertain for rectification. He submitted that the order cannot rectified on the grounds which were not taken in 1st round of appeal nor in 2nd round of appeal even these grounds were not taken even in the 1st miscellaneous application. How these grounds can be entertained at this later stage, for examination of these grounds, the appraisal of record and further investigation is required which in fact cannot be done in the rectification proceedings. Learned representative of taxpayer has placed reliance on the following three judgments of apex court reported as:-- 1992 SCM R 687 = 1992 PTD 570, 2007 PTD 967 (S.C.), 2008 SCM R 204 = 2008 PTD 253.
9. The honourable Supreme Court of Pakistan in the above judgments has held that during the rectification proceedings no new facts can be entertained. Any issue which need verification, investigation or perusal of facts from record other than the Tribunal record, like the examination of previous year record of department, verification of A letters, dispatch/ diary register etc. Cannot become subject matter for rectification. AR further contended that original order as well as the 1st rectification application was decided by the honourable Tribunal after examination of record and facts of the case as such this rectification application cannot be entertained. He has further argued that there must be end of issue and litigation cannot be allowed to carry on for an unlimited period.
10. We have heard the arguments of both the authorized representatives. It is a settled principle of law that no order can be rectified if the mistake is not floating on surface of record. Honorable Supreme Court in a judgment titled as CIR v. National Food Laboratories reported as 1992 SCM R 763 has dealt this question as follow:-- "Section 35 of the repealed Income Tax Act, 1922, hereinafter referred to as "The Act" confers a power to rectify any mistake in the order which is a apparent from the record. Such power can be exercised suo motu or if it is brought to the notice by tin assessee . Therefore, essential condition for exercise of such power is that the mistake should be apparent on the face of record. Mistake which may be seen floating on the surface and does not require investigation of further evidence. The mistake should be so obvious that on mere reading the order it may immediately strike on the face of it. Where an officer exercising power under section 35 enters into the contrivers. Investigates into the matter reassesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms and opinion different from the order, then it will not amount to rectification, of the order. Any mistake which is not patent and obvious on the record, cannot be termed to be an order which can be corrected by exercising power under Section 35."
11. 2008 SCMR 204 = 2008 PTD 253 deal this question as follow:- "Exercise undertaken by the Assessing Officer under section 156 of the Ordinance was not simply in respect of a mistake apparent on the face of the record within the contemplation of section 156
(ibid) rather it was reassessm ent of the tax liability of the assessee on the basis of existing record.
12. The expression "mistake apparent on record" means the error or mistake so manifest and clear which, if is permitted to remain on record, may have material effect on the case. But an error of fact or law. Which having direct nexus with the question of determination of rights of parties affecting their substantial rights of causing prejudice to their interest is not a mistake apparent on the record to be rectified under section 156 (ibid) the mistake must be of the nature, which is floating on the surface of record and must not invoice. An elaborate discussion or detailed probe or process of determination."
13. Learned DR has produced a copy of envelope. Envelope does not indicate that it had same complaint in it. Diary and Dispatch register has not been produced to corroborate that the complaint was received and entered in register in that sequence of events. Learned DR has drawn the attention of the Bench towards the foot note recorded by the Assessing Officer under assessm ent order dated 28-6-2004 which is hereby reproduced as under:-- "OFFICE NOTE-NOT FOR THE ASSESSEE" During the process of amended assessment a complaint was received against the assessee, which stated the following assets in the hands of the assessee but remained unauthenticated.
(1) three Bricks Kilns
(2) Market at Dudail comprising of 32 shops
(3) 10 kanal land in Dudial
(4) Service Station at Chakwal
(5) House under construction at Chakwal
(6) House valuing 5 million near fim kasar brick kiln
(7) 40 kanal land where turbine is installed
(8) Land purchased for 12 laks few months before
(9) Tractors numbering three
(10) Car IDD-6692
(11) Truck RIN-597
(12) Land of 5 lakhs near kiln
(13) Bank Account UBL
(14) Bank Account MCB
(15) Bank Account HBL
(16) Honda 125 and Yamaha 100
(17) Double Storey poultry Farm
(18) Kot Awan Bricks Co, Tariq Bricks Co. And Tawakal Bricks Co.- As per contention of learned DR, contention of the department gets weight because this office note was written on 28-6-2004 and complaint was alleged to be dated 10-5-2003 learned AR states that this note is office internal proceedings which was never confronted to the Taxpayer. Notice received by Taxpayer was dated 11-12-2004. He has not specifically alleged that complaint was received in Tax year 2004 prior to 28-6-2004. Hence Tribunal after the production of "office note" has come to conclusion that probability lean in favour of supporting the departmental version and ground reality is that complaint was received on 10-5-2003. Knocking at the doors of Tribunal again and again depicts the state of mind of the department that true finding of fact as per ground reality has not come on record through Tribunal's order. So after production of office note we hold that complaint was received on 10-5-2003. Learned DR has argued that Tribunal is final pedestal in the determination of fact finding. What is true and actually on ground that must be determined as fact. The learned AR sates that it was for the department to 'produce record in support of its version. Failure to produce record at the time of decision of appeal and first rectification application by the department has resulted into a finding which may be wrong but correct as per record available at that time, has attained finality. This 2nd rectification application has not to change the fate of appeal. It could only by one way that the department if would have preferred to go to Honotable High Court and another opportunity would have been granted for the production of evidence/record. The decision when not challenged attains the finality and equally enforceable. Hence rectification can only be sought for error floating on the surface of record or in the order. At relevant time of decision by the Tribunal, neither this office note was produced by the department nor there was any mistake in the order as per evidence produced at that time.
14. Tribunal or court has to afford equal opportunity to either of parties to prove their version; if one of the party fails at his turn, it cannot be afforded opportunity time again and again through miscellaneous application for rectification. The proper remedy was to assail the order before honorable High Court and if opportunity was granted to produce evidence which could not be produced due to any reason, then case was to be reopened in original appeal jurisdiction for deciding the appeal. Now scope of rectification is very limited. Order can be rectified if there was any error on the face of order at the time of passing the order. At the time of passing of order this footnote was not produced by the department. This lacuna can not be cured in rectification application. The proper remedy before Honorable High Court has not been availed by the department. If in a murder case, accused has been acquitted and prosecution can not change the fate of the order in the same trial forum through rectification by alleging that prosecution could not produce the evidence at relevant time. Golden principle is that rectification should not be made in cases where reappraisal of facts or re-adjudication of the issue in dispute is involved. At present, nutshell is that there is no mistake in the order as per available evidence at the time of decision.
15. Miscellaneous application for rectification is out of scope of rectification. Hence same stands dismissed. .