1. JAVID IQBAL (JUDICIAL MEMBER).---This order will dispose of the above captioned appeals instituted against the impugned order recorded by L/CIR(A) vide dated 21-4-2011, whereby appeal has been rejected on the ground that ex parte order under section 122C is not appealable. The grounds agitated are as follows:--
(1) That CIR (A) is not correct in saying that section 122C is not appealable. In section 127 there is clear mention of section 122 is applicable. There, is, no mention of its subsection or clause.
(2) Provisions of subsection (2) of section 122 for filing or return and other documents are not mandatory but discretionary because word "if" has been used for filing returns. So there is no restriction for filing appeal against the order under section 122C.
(3) That order of taxation officer passed under section 122C is unlawful and suffers from the following illegalities and also facts:--
(i) No notice whatsoever as mentioned in the body of order were received by the appellant.
(ii) The appellant is existing taxpayer at National Tax on 2290633-9 and filed returns of income tax regularly.
2. (i.e) Assessm ent has been framed on the hack of the appellant without obtaining/confirming his NTN whereas TRN allotted is unlawful.
(4) Since the appellant had filed his return, therefore, income tax demand created under section 122C stands quashed being double assessment.
(5) Receipts estimated and income assessed is imaginary and without material evidence whereas expenses allowed are extremely low.
(6) It is quite strange that in the body of order, taxation officer say's that as per information from PIMRA the appellant has 1000 subscribers whereas he has assessed the receipts of 3000 subscribers, which show that he wanted to create huge demand, which is financial murder of the appellant.
3. Precisely the facts of the case as per record are that taxpayer was brought on tax role on the basis of information received by the department from PIMRA. On the basis of aforementioned information proceedings were initiated by issuing notice under section 114(4) for filing of returns. As per the impugned order no compliance was made, subsequently notice under section 122C was also issued but this time too no compliance was made. Hence ex parte assessment under section 122C of Income Tax Ordinance, 2001 was framed. Feeling aggrieved from the order passed under section 122C appellant filed appeal before the 1st appellate authority, whereby the L/CIR(A) rejected the appeal on the ground that the order under section 122C is not appealable. Feeling aggrieved from the impugned treatment taxpayer has filed the instant appeals before this forum.
4. L/AR of appellant reiterated his contention as per grounds of appeal while on the part of L/DR, he supported the impugned order.
5. "122C. Provisional assessm ent.---(1) Where in response to a notice under subsection (3) or subsection (4) of section 114 a person fails to furnish return of income for any tax year, the Commissioner may, based on any available information or material and to the best of his judgment, make a provisional assessment of the taxable income or income of the person and issue a provisional assessm ent order specifying the taxable income or income assessed and the tax due thereon.
(2) Notwithstanding anything contained in this Ordinance, the provisional assessment order completed under subsection (1) shall be treated as the final assessment order after the expiry of sixty days from the date of service of order of provisional assessment and the provisions of this Ordinance shall apply accordingly: Provided that the provisions of subsection (2) shall not apply if return of income along with wealth statement, wealth reconciliation statement and other documents required under subsection (2A) of section 116 are filed by the person for the relevant tax year during the said period of sixty days."
6. Thus from bare reading of the above provision of law there remain no ambiguity that taxpayer has been given the option against the order passed under section 122C of the Ordinance, 2001 either to file the returns accompanied with wealth statement along with its reconciliation or to avail the right of appeal. Law does not place any restriction or bar on filing of appeal against the order under section 122(c) of the Ordinance, 2001 up to 30th June, 2010. However as per Finance Act, 2011 effective from July 9, 2011,bar against the right of appeal has been placed against the provisional assessm ent but subsection (2) of the section 122C is still there in the ordinance, as per this subsection the provisional assessm ent after period of 60 days become final assessment order.
7. Now question arise if the appeal has been filed before expiry of 60 days meant for provisional assessm ent, what would be the ultimate of it. In my view, it is a mere a irregularity and is curable, in the manner that if the period of 60 days meant for provisional assessment expires during the pendecy of appeal, being premature and incompetent appeal, on expiry of 60 days provisional assessm ent stand converted into final order and all the provision of the Ordinance applies mutis mutendis, and then appeal becomes mature and competent. In the instant appeals though amendment amendment of Finance Act, 2011 is not applicable being effective form 1-7-2011, hence appeals are competent. Therefore the L/CIR(A) was unjust to term that appeal is incompetent against the order under section 122C of the Ordinance, 2001. Even otherwise during pendency of appeal if period of provisional assessment stand converted into final assessment order, under section 122(c)(2) is an appealable order.
8. Considering the other factual position of the matter it was also pointed out that appellant is NTN holder having NTN.2290633-9 and is regularly filing his return of income. However at the time of hearing of appeals, photocopy of return pertaining only to tax yeaj 2009 filed electronically and acknowledged accordingly was produced. Return so filed is an assessment order under the term of section 120(1)(b) of the Ordinance, 2001 in the presence of it any other assessment order is nullity in the eye of law.
9. Regarding the other tax years though taxpayer claimed the filing of returns prior to passing of order under section 122(c) of Ordinance, 2001 but no proof was submitted. On examination of assessment record the service of notice has been found defective, as no personal service of notices seems to have been effected. Also the ex parte assessment could not be termed best judgment because as per the information from PIMRA as recorded in the ex parte assessment order, taxpayer has PIMRA license with the capacity of 1000 connections beyond this number appellant could not install extra connections, the taxation officer has taken it at 3000 connections which is not only unjust and unfair but also penalizing. So when the taxpayer is NTN holder; already exists on tax role, the completion of assessm ent at temporary tax number in the absence of the personal service of the statutory notices, the passing of order under section 122(c) at a figure which is at variance than one communicated by the PIMRA. Such circumstances render the order passed under section 122(c) to annulment and it is directed accordingly. However at the time of hearing the L/DR stated that there is some confusion about the annulment of the order, therefore to clarify as to what does the annulment means, and in which circumstances an order is to be annulled is explained as under:-- An assessm ent is annulled, where:--
(a) For initiation of proceeding a notice has been issued without jurisdiction.
(b) A notice has not been properly served.
(c) A wrong notice has been issued.
(d) Assessm ent has been framed on wrong person.
(e) Assessm ent has been made in wrong assessment year.
(f) Assessm ent has been made in respect of an income, which is not income or such income is exempt from tax.
10. As assessm ent was framed, when it was barred by time.
11. There is a common misconception prevailing that once an assessment is annulled, no reassessm ent could be framed. This situation obtain only in the cases mentioned at (t) and (g) above i.e. Where a proper notice s served on correct person by a correct officer for the correct assessm ent year, but the income was either not income or is held to be otherwise exempt or assessm ent was made when it was already barred by limitation. In all other cases reassessment can be made by issue of proper notice by the proper officer, served on proper person for the proper assessm ent year (as the case may be). However limitation as provided in the Ordinance is to be taken into consideration. The annulment of order differ from the remand of case, remand of case acknowledge the period of limitation where in consequence of remand order period of limitation has separately been provided which is to be counted from the date of order of remand in the Ordinance and on annulment assessment could be framed within the period as stipulated in the Ordinance i.e. 5 years from end of the financial year in which income was 1st taxable. . revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.