1. ' This appeal has been filed by the Department against the Order No,1051 of 2010 passed by the learned CIR(A-I), Islamabad, dated 30-11-2010 for the assessment year 2005 on the following grounds:--
(1) That the subsequent order under section 221 dated 1-9-2008 was passed for the second time which was annulled.
(2) Since the order under section 221 dated 1-9-2008 was annulled, hence previous order dated 4- 2-2008 remained intact that is why fresh order under section 221 was passed under section 221 on 1-9-2008 within the time limitation.
(3) In presence of the order of the CIT(A) order dated 15-4-2009 and order dated 22-10-2009 on miscellaneous application this concept that. Assessing Officer does not have jurisdiction to pass any order is totally wrong as the orar under section 221 was passed in the light of judgment of ATIR Islamabad bench vide its order in I.T.A's. Nos. 432-433/IB of 2009 dated 17-10-2009.
2. Brief facts of ,the case are that a Taxpayer, a private limited company is engaged in the business of execution of contracts. For the tax year 2005, return was filed by declaring gross receipts, as under:--- Amount of Receipts Rates Tax due Tax Paid Rs.28,909,523 5% Rs.1,445,476 Rs.1,445,476
(1) (2) (3) (4) (5) Rs.28,406,632 6% Rs.1,704,398 Rs.1,698,096 Total Rs.57,316,155 Rs.3,149,874 Rs.3,143,572 The assessm ent for the Tax year 2005 was rectified under section 221 on 1-9-2008 by creating demand of Rs,264,736. The taxpayer being aggrieved filed appeal before CIT(A), who vide Order No,46 dated 26-2-2009 annulled -the assessment.. The Inland Revenue Officer, Rawalpindi vide Letter No, 174 dated 12-12-2009 had been conveyed the directions of CIT(Legal) regarding initiation of fresh assessm ent proceedings under section 221 for the Tax year 2005 as ,department had still limitation to rectify the deemed assessment and deemed assessment was rectified vide order dated 24-5-2010. Being dissatisfied with the treatment given by the IRO, Islamabad the Taxpayer preferred appeal before learned CIR(A-I) who annulled the order passed by the Inland Revenue Officer with the following remarks:- "The arguments put forth by the appellant have been carefully examined and the reported case- laws probed. The assumption' of jurisdiction by the Assessing Officer after annulment of the original proceedings in CIT(A) Order No, 373 of 2009 dated 15-4-2009 is totally uncalled for being exercised in clear violation of the settled legal principles and thereafter is not sustainable in law and as such order under section 221 dated 24-5-2010 is annulled."
2. ' In first appeal this order has been annulled by learned CIR(A). The department has come in 2nd appeal before us on the grounds mentioned supra.
3. We have heard the arguments and scrutinized the record. As per record available on file detail finding is as under;-
(A) TAX CREDITS ' First of all we take credit of tax under sections 235. And 236. Learned AR has argued that Assessing Officer vide original order under section 115(4) dated 4-2-2008 has allowed adjustment of tax under sections 235 and 236 which still holds field. It is settled principle of law that rights once accrued cannot be taken away. Reliance is placed PLD 1969 SC 407 at page 412 (Pakistan through the Secretary, Ministry of Finance v. Muhammad Himayatullah Farukhi) and 1997 SCM R 15 (Chairman, Selection Committee/Principal, King Edward Medical College Lahore v. Wasif Zamir Ahmed and another). Denial of adjustment of tax recovered under sections 235 and 236 does not arise from any part of the section 115(4)' of the ITO 2001. Section 115(4), relates to the extent of final taxation orders or percentage/ratio. It is not relevant to the source of tax paid/charged. Any tax paid under the provision of the Ordinance, 2001, can be adjusted against that liability. Section 153(6) read as under:- "The tax adjustment under this section shall, be final tax on the income of a resident person arising from transactions referred to in subsection (1) or (1A)."
3. ' We also think it proper to refer section 234-A, vis-a-vis specific non-adjustment of withholding tax collected or deducted from CNG.
4. ' Section 235 subsection (2)
5. ' The person preparing electricity consumption bill shall charge Advance Tax under subsection, (1) in the manner electricity consumption charges are charged.
6. ' Section 23'6 subsection (2)
7. ' The person preparing the telephone bill shall charge Advance Tax under subsection (1) in the manner telephone charges is charged. Reference is invited to the definition of world advance.
(1) Black's Law Dictionary 7th Edition-page 53 The furnishing of money and goods before any consideration is received in return.
(2) 21st Century Dictionary page 18 A payments made before it is due.
(3) Webster's New World Dictionary page To pay money before due. So advance is synonymous in both the sections.
8. The income of the assessee has already been taxed at source. The denial to give credit of deducted under sections 235 and 236 leads to double taxation. Demand created after the denial of aforesaid adjustment, cash payment of tax, which too is also adjustable is not sustainable. Section 170 of ITO 2001 entities the Taxpayer for refund of excess tax unconditionally. Reference is made to FBR income tax refund general order dated 24-4-2007 on the issue of adjustment of tax against any pending demand. Reliance is placed on 95 Taxation (Statue at page 314). Taxing act is fiscal law, one has to look merely what is clearly said, nothing to be read in imagination, nothing is to imply. Reliance has been placed on 2009 PTD 1, (1921)1 KB. 64 at page 71and (1965) 55 ITR 741 at page 747. Undoubtedly, tax deduction is adjustable under PTR unless it is specifically prohibited under law as in case of CNG referred in section 234-A vis-a-vis specific non adjustment of withholding tax collected or deducted from CNG. So the DCIR has wrongly disallowed the tax credit.
9. These are allowable credits and liable to adjustment.
(B) FRESH PROCEEDINGS AFTER ANNU LMENT.
10. ' We do not endorse the argument of learned AR that after annulment, fresh proceeding cannot be initiated. The Tribunal has held vide its order I.T.As. Nos. 432 and 433/IB/2009 dated 17-10-2009 as under:-- "Annulment of assessment on legal grounds such as invalid service of notice, non-providing of opportunity of being heard, violation of any statutory requirement etc. Does not debar the revenue, subject to limitation, to do the needful denovo after meeting the legal requirements strictly in accordance with law."
11. This verdict is based on wisdom that if department cannot fulfill the legal requirement in the manner as prescribed under the law or basis of assessment is without authority, then the entire superstructure built thereon would fall on the ground automatically. Needless to mention it that by annulling the rectified/amended assessment order passed by the tax authorities are removed, from the way and in result, deemed assessment remains in the field. The department is well within its his functioning by opting proper legal course and procedure if the limitation is not beyond the clock. In this case controversy is that if value of contract exceeds 30 million then the rate of tax will be 6% on gross payment and in any other case 5% of gross payments under clause (c) of subsection (1) of section 153. The relevant extract of Order No, 51 of 2010 dated 22-10-2009 is reproduced as under:-- "I have considered the contents of misc application perused the order and relevant provision of law and found that the Taxation Officer has taken the Total receipts declared as per statements under section 115(4) for the purpose of taxation @ 6% whereas contract wise detail mentioned in the order of Taxation officer is very much clear that none of the contracts is more than 30 million to which a rate could be. Applied @ 6%. Clause 3 of Div-III of the First Schedule to the Income Tax Ordinance, 2001 is reproduced hereunder.
12. ' The rate of tax to be deducted from a payment referred to in clause (c) of subsection (1) of section 153 shall be:-
(a) In the case of contract with a value exceeding 30 M, 6% of gross amount payable; or
(b) In any other case 5% of the gross amount payable; ' In view of the above miscellaneous application filed by the department is rejected being without merit."
13. ' During arguments of this case learned AR has not laid stress on this factual side and even not disputed the table worked out by DCIR in 24-5-2010 which is reproduced as under:-- Contract Receipts Tax Deducted Tax Payable Diff Contract Receipts (More than 30m)52,666,155 2,888,934 3,159,969 271,035 Contract Receipts4,650,000 232,500 232,500 (Below than 30m)
14. Tax Deducted on utility bills 22,138 22,138 Tax paid with return 6,302 (-6,302)
15. Total 3,149,874 3,392,469 242,595
4. Hence it appears that factual sides of the contractual receipts concluded by the DCIR, are correct one. The taxpayer is liable to pay the difference of tax amounting to Rs,271,035. However he will be given tax credit under sections 235, 236 and even of the cash payment of tax with the return.
16. So departmental appeal is partially accepted and taxpayer has to deposit the tax as per figure mentioned in the above said table amounting to Rs,271,035.