1. JUDGMENT: MR. JUSTICE ROOH-UL-AMIN KHAN.-(1). Commissioner Income Tax/Wealth Tax Companies Zone, Peshawar has filed this Tax Reference to seek answer to the following question of law:- "Whether on the facts and in the circumstances of the case, the learned ITAT was justified in holding that section 122{5 A) of the Income Tax Ordinance, 200I brought into statute through Finance Act, 2003 is not applicable to the assessment completed before the promulgation of the Income Tax Ordinance, 2001 whereas the amendment brought in through Finance Ordinance, 2002 in subsection (1) of section 122 extends the applicability of section 122 to the assessment completed under the Provisions of the Income Tax Ordinance, 1979 as well."
2. 2.Brief but relevant facts of the case are that the respondent is a Private Limited Company under the name and style of Pakistan Refrigeration (Pvt.) Ltd. And running the business of a cold storage and Ice Factory. The respondent derives income from the above said business and a regular taxpayer under N.T. No. 17-02- 0005314. His income for the year 1998-99 was assessed and finalized under section 62 of the Income Tax Ordinance, 1979 on 18-1-2001. Later on, the Additional Commissioner Income Tax, on examination of the case observed that the assessment for the assessm ent year 1998-1999, framed under section 62 dated 18-1-2001 being erroneous is prejudicial to the interest of a revenue therefore, the income of the assessee for the year, 1998-99 was reassessed and amended under Section 122(5 A) of the Income Tax Ordinance, 2001 whereby the income of the assessee company was worked out in the following manner: Net income as per order under sections 132 Vide IT-30 dated 10-8-2001Rs. 140,252 Add: Prior year adjustment Rs. 3061258 + 1039412 under section 39 of the Income Tax Ordinance,2001 (as discussed above) = Rs. 4,100,670 NET INCOME FOR THE YEAR, Rs. 4,240,922
3. Aggrieved with the aforesaid assessment of Additional Commissioner Audit Companies Zone, Peshawar, the assessee/respondent filed an appeal before the Commissioner Income Tax (Appeals), who vide order dated 20-3-2006 accepted the same wherein it was held that the provision of section 122(5A) of the Income Tax Ordinance. 2001 was not applicable, in view of the case 2005 PTD 1621 and the amended assessm ent dated 14-1-2006 was deleted.
3. 4.Against the above said order, the appellant preferred appeal before Income Tax Appellate Tribunal which was dismissed vide order dated 28-8-2006 and upheld the order of the Commissioner Income Tax (Appeals) dated 20-3-2006 was upheld. Hence this Tax Reference.
4. 5.Learned counsel, for the petitioner argued that section 122(5A) of the Income Tax Ordinance, 2001 as inserted w.e.f. 1-7-2003 is retrospective in its operation and the assessment order dated 14-1- 2006 for the assessm ent year, 1998-99 was in accordance with law.
5. 6.In rebuttal, learned counsel for the respondent vividly argued that the question of applicability of section 122(5 A) of the Ordinance (ibid) has been brought into statute through Finance Act, 2003 and was not applicable to the assessment completed before promulgation of Income Tax Ordinance. In support of his arguments, he placed reliance on PTCL 2009 CL. 204.
6. 7.Section 122 of the Income Tax Ordinance, 2001 was amended through Finance Act, 2003 w.e.f. 1-7- 2003. The amended provision 5A of section 122 of the Ordinance (ibid) read as under:- "(5A) Subject to subsection (9), the Commissioner may amend or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue." Vide the above said amendment, the Commissioner was empowered to amend or further amend on to other considerations namely, the erroneous of an assessment or its being prejudicial to the interest of a revenue.
7. 8.As a general rule, every statute shall be deemed to be applicable from the date of its coming into being unless with express provision retrospectivity is given to it. Section 122(5A) of the Income Tax Ordinance, 2001 was added by the Finance Act, 2003 w.e.f. 1-7-2003. The same addition has not specifically been made applicable with retrospective effect, thus, section 122(5 A) of the Ordinance
(ibid) inserted in the year, 2003 would not be made applicable to the assessment finalized before it.
8. 9.The question of interpretation and applicability of section 122 of the Income Tax Ordinance, 2001 with prospective or retrospective effects came before the Hon'ble Supreme Court of Pakistan in various appeals, decided vide judgment reported in PTCL 20I0 CL. 1 wherein it was held that:- "Provision of S. 122, Income Tax Ordinance, 2001 is impregnated with an essential attribute, which affects an accrued right of an assessee or a taxpayer that after efflux of a certain period of time, his assessm ent will not be opened or amended-Section 122 of the Income Tax Ordinance, 2001, therefore, cannot be applied retrospectively unless the Legislature intended to give it retrospective effect - Section 122 having the potential of adding to the liability of the taxpayer, the same was not a mere matter of procedure and taxpayers/assessee have a right that their assessments will not be opened after the expiry of the statutory period of five years." The same view was followed by this Court in a case reported in PTCL 2009 CL. 181.
9. 10.Respectfully following the dictum laid down by the Hon'ble Supreme Court of Pakistan in case title Commissioner Income Tax v. Messrs Elilay Pakistan (Pvt.) Ltd. (PTCL 2010 CL. 1) on the proposition, we find this Tax Reference devoid of merits which is hereby dismissed.