' MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this Intra Court Appeal, the appellants have assailed the judgment dated 10-8-2012 passed by the learned Single Judge whereby the notice dated 18-5-2012 under section 138(1) of the Income Tax Ordinance, 2001 (hereinafter referred to as the "ITO, 2001") and the decision rendered on 26-6-2012 have been declared without lawful authority.
2. The appellants issued warrants of detention of respondent under Rule 186 of the Income Tax Rules, 2002 coupled with notice under section 138 (1.) of the ITO, 2001 claiming that the respondent is a shareholder of a private limited company known as Irum Ghee Mill (Pvt.) Limited (hereinafter referred to as the "Company"). The appellants on 18-5-2012 issued notice (hereinafter referred to as the "impugned notice") to the respondent under section 138(1) of the ITO, 2001 directing to pay a sum of Rs,5,10,983,584 being the income tax due for the period 1994-1995 to 2002 to 2003 as he was the shareholder in the Company. The respondent challenged the impugned notice and the Commissioner Inland Revenue vide order dated 26-6-2012 rejected the respondent's representation and issued his warrants of arrest. The respondent assailed the order dated 26-6- 2012 through Writ Petition No,18046 of 2012 asserting that he was minor at the time when he was shown as the shareholder of the Company; his father was looking after his shares if any; according to the record after the year 1996 he was ceased to be the shareholder of the Company. He claimed refuge under section 2(66) of ITO, 2001 and contended that he is not the taxpayer. He asserted that the income of a minor child for a tax year chargeable under the head income from business shall be chargeable to tax as the income of the parent of the child with the highest taxable income for that year in terms of section 91 of ITO, 2001 and the notice under section 138 of the ITO, 2001 can only be issued for recovering the tax from a tax payer. The learned Single Judge declared that the respondent was minor and as such the notice under section 138 of the ITO, 2001 was illegal.
3. Learned counsel for the appellants submits that under section 156(1) of the Companies Ordinance, 1984 every company incorporated under the Ordinance ibid is bound to file annual returns containing list of members of the Company vide Form-A which will show the ownership of every shareholder of the company. He further submits that under section 155 of the Companies Ordinance, 1984, the registers maintained by the Company as referred to in sections /6, 147,149 and 156 of the Companies Ordinance, 1984 will be the evidence of the matters detailed thereunder.
Learned counsel submits that the learned Single Judge has erroneously interpreted section 156 of the Companies Ordinance, 1984 whereby the learned Single Judge declared Form-A equal to the registers of shares of the Company. Learned counsel submits that the register of transfer of shares has not been produced and as such even prima facie evidence that the respondent's shares have been transferred was not brought before the learned Single Judge; that the claim of respondent that he was minor is also not proved on the record. Learned counsel submits that Form-A placed on record does not show that the respondent is still the owner of alleged shares or the respondent's guardian had transferred the shares on behalf of respondent, no transfer deeds have been placed on record nor any amount of sale of shares has been explained and as such the learned Single Judge has fallen in error while holding that the respondent has sold his shares being minor through his guardian and he is no more shareholder of the Company and as such he is not the tax payer.
Learned counsel submits that in the constitutional jurisdiction of this Court, the Court has no power to hold factual inquiry.
4. Learned counsel for the respondent supports the impugned judgment and submits that admittedly the respondent was minor at the relevant time when he has been shown a shareholder of the Company; the respondent being a minor has not played any active role nor he could play any active role in the management of the Company being minor. Learned counsel submits that Form-A placed on record will show that after 1996 the respondent becomes non-existent in the shareholders' list of the Company. Learned counsel further argued that under section 2(66) of the ITO, 2001 the petitioner is not a tax payer and under section 91 of the ITO, 2001 the income of a minor child for tax year is chargeable under the head "Income from Business" shall be chargeable to tax as the income of the parent of the child with the highest taxable income for that year. He submits that there is no allegation against respondent that his guardian/parents were not paying the tax or they evaded any tax. Learned counsel, thus, submits that the appeal is liable to be dismissed.
Learned counsel vehemently argued that the appeal is not maintainable as the detention order passed under Rule 186 of Income Tax Rules, 2002 is an appealable order. He relied on the cases of Muhammad Abdullah v. Deputy Settlement Commissioner, Centre-I, Lahore (PLD 1985 Supreme Court 107) and Mst. Karim Baksh and another v. Hussain Bakhsh and another (PLD 1984 Supreme Court 344).
5. We have heard the learned counsel for the parties and examined the record.
6. The respondent's case is that he was minor at the relevant time and ceased to be the shareholder of the Company after 1996. The respondent is not covered under section 2(66) of the ITO, 2001 and under section 91 of the ITO, 2001 his parents/guardians are liable to pay the tax and there is no allegation against the guardian or parents of the respondent that they are defaulters or they have evaded the income tax.
7. Learned Single Judge while ascertaining that the respondent is ceased to be the shareholder in the year 1996 has relied on Form-A filed by the Company for the years 1994 to 1996 being the conclusive proof of respondent's contention that he sold his shares in 1996. Under section 156 of the Companies Ordinance, 1984 every company has to submit a return containing the particulars specified in Form-A of the third schedule as on the date of the annual general meeting or if the meeting is not held or concluded on the last date of calendar year, this means Form-A is the copy of register of shares maintained by the Company, the register will show that when the shares were transferred and who is the last owner of the shares. Form-A placed on the-court record for the year 1994-1996 shows that the respondent was the shareholder in the Company but in the subsequent Forms it is not mentioned when the respondent transferred the shares and who was his guardian or who transferred his shares on his behalf. If the respondent has transferred his shares through his Guardian that entries will be available on the Company record. Under section 147 of the Companies Ordinance, 1984 every company is bound to maintain a register of member and debenture holders, for better appreciation of section 147, it is reproduced as under:-- "147. Register of members and index.---(1) Every company shall keep in one or more books a register of its members and enter therein the following particulars, namely:---
(i) the name in full, father's name (in the case of a married woman or widow, the name of her husband or deceased husband), nationality, address, and occupation, if any, of each member, and, in the case of a company having a share capital, a statement of the shares held by each member, distinguishing each share by its member, and of the amount paid or agreed to be considered as paid on the shares of each member;
(ii) the date at which each person was entered in the register as a member;
(iii) the date at which any person ceased to be a member and the reason for ceasing to be a member.
(2) Every company having more than fifty members, shall, unless the register of members is in such a form as to constitute in itself an index, keep an index of the names of the members of the company and shall, within fourteen days after the date at which any alteration is made in the register of members, make the necessary alteration in the index.
(3) The index shall, in respect of each member, contain a sufficient indication to enable the entries relating to that member in the register to be readily found.
(4) If default is made in complying with the requirements of subsection (1) or unnecessary delay takes place in entering in the register of members the name and particulars of any person who has become or ceased to be a member of a company, as the case may be, the company shall be liable to a fine not exceeding two hundred rupees for every day during which the default continues; and every officer of the company who knowingly and willfully authorizes or permits the default or causes unnecessary delay in entering in the register the name and particulars of any person who has become or ceased to be a member of a company, as the case may be, shall be liable to the like penalty.
(5) If default is made in complying with the requirements of subsection (2) or subsection (3), the company and every officer of the company who knowingly and willfully authorizes or permits the default shall be liable to a fine not exceeding two thousand rupees".
8. Section 76 of the Companies Ordinance, 1984 provides the procedures for the transfer of shares of the debentures, this will show that company must have maintained the registers under section 147 of the Ordinance, 1984 showing the transactions of the transfer of shares, admittedly said evidence has not been produced on record. Even after the year 1996, no Form-A is available on the record which shows that the respondent's shares have been transferred in whose favour and on which date.
9. It is also not available on record who received the sale price of the shares of the respondent. The question of transfer of shares is a question of fact which can only be ascertained after recording the evidence. The learned Single Judge in constitutional jurisdiction without recording evidence ascertained that the respondent sold his shares on the basis of bald statement of respondent.
Further, the fact of respondent's minority could not be ascertained on the basis of single document i,e, the birth certificate issued by NADRA on 7-8.2012, The ascertainment of the fact of minority requires recording of evidence and in constitutional jurisdiction this exercise cannot be done.
Hence, on the basis of deficient documents, no decision can be taken that respondent is a minor or he has sold his shares in the year 1996.
10. Section 156 of the Companies Ordinance, 1984 provides a complete mechanism about the list of members, details of members and shareholding of the members, Form-A alone could not be termed as conclusive proof of shareholding of the shareholders of the Company. It is also an admitted, fact that in a private limited Company all shares of a shareholder cannot be transferred without permission of the Board of Directors, the respondent has not produced on record any document that Board of Directors permitted him to transfer his shares,
11. For appreciating the arguments of learned counsel for respondent that Intra Court Appeal is not maintainable, it has to be seen whether the order of issuing notice under section 138 of the ITO, 2001 is appealable or not Section 138 of the ITO, 2001 is reproduced as under:- "Recovery of tax out of properly and through arrest of taxpayer,---(1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer ' a notice In the prescribed form requiring him to pay the said amount within such time as may be specified in the notice,
(2) If the amount referred to in the notice issued under sub= section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner, may proceed to recover from the taxpayer the said amount by one or More of the following modes, namely;
(a) attachment and sale of any movable or immovable property of the taxpayer appointment of a receiver for the management of the moveable or immovable property of the taxpayer; and
(b) arrest of the taxpayer and his detention in prison for a period not exceeding six months".
12. Under section 127 of the ITO, 2001 the right of appeal is provided which shows that any order passed by a Commissioner or taxation officer under section 138 of the ITO, 2001 is not appealable.
The basic challenge by the respondent is notice under section 138 of the ITO, 2001 which itself provides authority to the Commissioner for attachment of the taxpayer defaulter's property and even his detention and arrest and as such the argument of learned counsel for the respondent that the appeal is not maintainable is not sustainable in the eye of law. As no appeal is provided against order under section 138 of the ITO, 2001 that is the reason the respondent invoked the constitutional jurisdiction of this Court, hence, the Intra Court Appeal is maintainable.
13. But the question is whether the respondent could be left on the mercy of Commissioner Income Tax. Under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973 every citizen of Pakistan has right of fair trial and hearing. In case the appeal is not provided, the respondent will have to go to jail for non-payment of tax settled without providing opportunity of hearing to alleged defaulter. In these type of situations, the order of Commissioner will be in violation of Article 10-A of the Constitution. Hence, we are of the opinion that the Commissioner Income Tax before passing final order should have called a person for explanation, it seems that the respondent- Commissioner has held inquiry but the respondent was not allowed to produce evidence.
14. In view of the above, we set aside the judgment of the learned Single Judge and direct the Income Tax Commissioner to allow the -respondent to the explain his case and to produce documentary evidence showing that he was minor and his guardian has sold his shares in the year 1996. The Commissioner Income Tax will complete the said process within fifteen days from the date of receipt of certified copy of this order enabling the respondent to avail the right of hearing as the respondent's right of liberty is, involved in this case and will execute the impugned notice dated 18-5-2012 after that.
15. The appeal is allowed in the above said terms.