MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER.---By this order, we intend to dispose of above titled appeal filed by the appellant/department against the impugned order No. 1050 dated 14-10- 2014 pertaining to tax year 2108 on the following grounds.
"1). That the learned CIR(A) fell in error in observing the provisions of section 120(4) provided for time limitation for amendment of assessment.
2). That the learned CIR(A) failed to appreciate that provision of section 122(4) of Income Tax Ordinance, 2001 provide for limitation for further amendment of orders amended passed under section 122 of Income Tax Ordinance, 2001.
3). That the learned CIR(A) failed to appreciate that impugned order under section 122(5A) was first amendment to the original assessment under section 120 of the Income Tax Ordinance, 2001."
2. Brief facts of this case as gathered from the record are that the taxpayer/respondent is a motorcycle assembler as well as importer of motorcycle parts for self manufacturing and having status of AOP. The return of income was filed at Rs.10,188,184/- for the year under appeal on 30-10- 2008. Assessm ent in terms of Section 120(1)(b) of the Income Tax Ordinance, 2001, treated to have been finalized/passed on 30-10-2008 for the tax year 2008, was considered erroneous and prejudicial to the interest of revenue by the concerned Additional Commissioner Inland Revenue, Audit Range-A, Range-I, RTO Hyderabad, the ACIR initiated proceedings under section 122(5A) on 29-03-2011 and deemed order has been amended on taxable income at Rs.114,462,483/- in which impugned addition was made in pursuance of sections 111(1)(b)/111(3) of the Income Tax Ordinance, 2001 at Rs.104,274,299/- and as per record order under section 122(5A) was passed on 19-06-2014.
3. Being aggrieved and dissatisfied with the treatment meted out by, the Addl. Commissioner-IR, taxpayer preferred appeal before learned Commissioner (Appeals), who vide impugned order cancelled the order passed by the ACIR under section 122(5A) the learned CIR(A) while cancelling the order has observed as appended below:-- "After considering the arguments and perusal of the record I am of the view that section 122(5A) was inserted by the Finance Act, 2009 and being substantive in nature and even is applicable to tax year 2010 and onward and not retrospective to tax year 2008. My this point of view is further strengthened by the judgment of the ATIR reported as 2013 PTD (Trib.) 1169 which subscribes as under: "Statutes are presumed to be only prospective in their operation, according to the authorities on the question, rather than retrospective or retroactive, unless the contrary appears, or is very clearly, plainly and unequivocally expressed or necessary implied. Under the presumption that a statue is intended to apply alike and equally to all persons unless the contrary clearly appears, a statute cannot be retroactive as to some persons and prospective as to others unless the legislature has indicated a manifest intention that it should be so."
Beside, before the insertion of section 122(5), section 122(2) of the Ordinance, 2001 were applicable into the year under review i.e. tax year 2008, which for convenience is reproduced as under:-- "(2) An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the assessment order on the taxpayer."
As is evident from the above that limitation is to be reckoned form the date of return or issuance of assessment order under section 120 of the Ordinance by the Commissioner. In the case in hand, taxpayer has filed return on 29-09-2008(*) from which is clearly emanates that deemed assessment order under section 120 was passed on 29-09-2008 and it could be reopened under section 122(4) by 28-09-2013 i.e. within five years from the date of filing of return or issuance of deemed assessment order; whereas the taxation officer has passed the amended order on 19- 06-2014 and following the same ratio decided as taken by the learned ATIR in the case reported as (2014) 109 Tax 127 (Trib) therefore, is badly hit by limitation and order under section 122(5A) is hereby cancelled on legal ground" (*). Wrongly typed. Correct date to be read as 30-10-2008.
4. Feeling aggrieved and dissatisfied with the impugned order now the department has come up in appeal before this Tribunal.
5. On the date of hearing, Mr. Iqbal Ahmed Shaikh appeared on behalf of the Appellant/Department as D.R. while Messrs A.S. Jaffri, Advocate and Mr. Kamran Rizvi, Advocate appeared on behalf of the Respondent/Taxpayer.
6. Learned D.R. at the very outset, contended that the order passed under section 122(5A) of the Income Tax Ordinance, 2001 vide No.31/03 dated 19.06.2014 was the first amendment of assessment of the original assessm ent/deemed assessment order issued under section 120(1) of the Income Tax Ordinance, 2001. Therefore, provisions of section 122(4) of the Income Tax Ordinance, 2001 do not apply on the above order passed under section 122(5A) of the Income Tax Ordinance, 2001. He vehemently asserted that the order under section 122(5A) is not barred by limitation and duly framed within limitation, therefore, he prayed that order under section 122(5A) of Addl.
Commissioner Inland Revenue be upheld.
7. On the other hand, learned counsel for the taxpayer has strongly opposed the contentions made by the learned D.R. and supported the order passed by the learned CIR(A). Learned counsel for the taxpayer apprised that the income tax return in the case was filed on 30-10-2008 which was taken to be an assessm ent order in terms of section 120(1) of the Income Tax Ordinance, 2001 and amended order under section 122(5A) was finalized on 19-06-2014 which is beyond five years.
Learned counsel for the taxpayer further pointed that at the time of filing of return, the limitation of amending the assessm ent framed under section 120(1) was provided by statute as five years before amendments in subsection (4) of Section 120 of the Income Tax Ordinance, 2001, therefore, assessm ent framed under section 122(1) of the Ordinance could only be amended upto 30-10-2013, but in the case the amended assessment order under section 122(5A) of the Income Tax Ordinance, 2001 has been recorded/passed on 19-06-2014 which is absolutely time barred being after the time limitation of five years. Learned counsel for the taxpayer stressed that the extended time limitation will not be applicable in the instant case of the taxpayer, who filed income tax return on 30-10-2008, when time limitation of five years was prevailing. He has contended that the impugned order passed by the learned CIR(A) is legal, lawful and in accordance with law. In support of his arguments he has relied upon the following reported precedents/case law:
(i) 2015 PTD 424
(ii) 2015 PTD (Trib.) 434
(iii) 2015 PTD 772
(iv) 2013 PTD (Trib.) 159
8. We have considered the rival arguments and the synopsis furnished by the learned AR.
9. It is an undisputed fact that when the return for the tax year 2008 was filed, the provisions of section 122(2) before amendment through Finance Act, 2009 were applicable. The maximum time mandate under section 122(2) as it stood at the time of filing of return was five years from the date of the order sought to be revised. The provisions of section 122(2) of 2001 Ordinance (before amendment by Finance Act, 2009) are reproduced below for convenience:-- "An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the assessment order on the taxpayer."
10. The order under section 120 of the 2001 Ordinance was treated to have been passed on the date of filing the return viz.30-10-2008. If the limitation period is computed as per the provisions of section 122(2) as the same stood at the time of filing the return (which remained unamended until Finance Act, 2009 was passed effective July 1, 2009), the period of limitation would be considered to have been expired on 29-1-2013.
11. The provisions of section 122(2) were, however, amended through Finance Act, 2009 effective July 1, 2009 whereby the substituted provision stated as under:- "No order under subsection (1) shall be amended by the Commissioner after the expiry of the financial year in which the Commissioner has issued or treated to have been issued the assessment order to the taxpayer."
12. Thus, if section 122(2)'s time limitation after amendment by Finance Act, 2009 is applied to the instant case, then the time limitation expires on reaching five years from 30-10-2008 (being the end of the financial year in which the assessment was treated to have been issued on the taxpayer) i.e. 30-10-2008. The controversy that needs to be resolved is thus, whether or not the assessm ent order issued in the year in appeal dated 19-6-2014 was time barred under section 122(2) as it stood at the time of deemed assessment under section 120(1); or not time barred under section 122(2) as was amended through Finance Act, 2009.
13. At this point of time, we feel it appropriate to refer few settled principles of interpretation of fiscal statutes relating to limitation of time enunciated and consistently followed by our Superior Judiciary. It is important to do so because it is the duty of the court seized of the matter to apply the correct law to meet the ends of justice.
14. It is the primary duty of Courts and other adjudicating forums to decide matters lie before them in accordance with law. The Courts would not be relieved of such duty on account of fact or mean of litigation or of a lawyer. In a judgment in the case of Gatron Industries Ltd., reported as 1999 SCMR 1072 it was held by the Hon'ble Supreme Court of Pakistan that:-- "Even when leave is not granted on a point, the same can be allowed to be canvassed in appeal if it is necessary for doing complete justice in a case or a matter pending before the Court as contemplated by sub-article (1) of Article 187 of the Constitution. Reliance can be placed on the judgment of the Hon'ble Supreme Court of Pakistan in the case of Caltex Oil (Pakistan) Ltd. v.
Collector Excise and Sales Tax and others reported as 2006 SCMR 1519."
15. It is well-known maxim that judge must wear all the laws of the country on the sleeve of his rob and failure of the counsel to properly give assistance is not a complete excuse in the matter. This principle of law was laid down by the Hon'ble Supreme Court in Muhammad Sarwar's case reported as PLD 1969 SC 278. It is the obligation of the Court to look into the point of limitation even when there being objection of any party.
16. As regards the statute of limitation, it might be useful to refer certain decisions from Indian jurisdiction (which are persuasivein nature but provides some guiding principles). The Supreme Court of India in the case of State of Kerala and others v. V.R. Kalliyanikutty and another rendered its judgement on April 1, 1999 wherein the important of statute of limitation was expressed in following words:-- "The law of limitation itself rests on the foundations of public interest. The courts have expressed at least three reasons for supporting the existence of statutes of limitation: (1) that long dormant claims have more cruelty than justice in them; (2) that a defendant might have lost the evidence to disprove a stale claim; (3) that persons with good causes of action should pursue with reasonable negligence. (See Halsbury 4th Edn. Vol. 28 paragraph 605). In New Rattanmal and others v. State of Rajhastan (AIR 1961 SC 1704), the Statutes of Limitation have been considered of Statutes of Repose and Statutes of Peace."
17. A similar observation as regards the importance of statute of limitation particularly in the context of income tax cases was made by the Gauhati High Court in the case of Smt. Savitri Rani Malik v. Commissioner of Income Tax decided on June 14, 1990 reported as (1990) 186 ITR 701. The relevant excerpt is as under: "In Courts where British jurisprudence prevails, statutes of limitation are jurisprudential necessities.
See the American case, Bell v. Mormon (1828) 1 Peters 351 at page 360. Limitation is said to be "a statute of repose". Corpus Juris Secundum, Vol 53, at page 901: "Statutes of limitation are statutes of repose, the object of which is to suppress fraudulent and stale claims from sprining up at great distances of time and surprising the parties or their representatives when all the proper vouchers and evidences 'are lost or the facts have become obscure from the lapse of time or the defective memory or death, or removal of witnesses the statute (of limitation) is for the benefit and repose of individuals and not to secure general objects of policy and morals." In the UK, the most ancient case is that of A' Court v. Cross [1825] 3 Bing 329 at page 360, in that limitation was described as "an act of peace". In an opinion expressed in Ampthill Peerage's case [1976] 2 All ER 411 at p. 423, the House of Lords observed: "Truth may be shut out (by operation of limitation) but society considers truth may be bought the fundamental principle (is) that there should be some end to litigation "
We find solace in what is stated to be eternal verity of life and law that statutes of limitation achieve peace and good administration but do not advance morals and poor conduct."
18. The Income Tax Appellate Tribunal - Ahemedabad of India in the case of Shri Arvindhbhai H.
Shah v. The Assistant Commissioner of Income Tax, reported as (2004) 270 ITR 125 observed as under:-- "Story in his Conflicts of Laws, 8th Edition page 794 observed thus - "Statutes of Limitation are statutes of repose, to quiet title, the suppress of frauds and to supply the deficiency of proofs.
Arising from the ambiguity and obscurity or the antiquity of transactions. They proceed on the presumption that claims are extinguished or ought to be held extinguished where they are not litigated within the prescribed period. They quicken diligence by making it in some measure equivalent to right. They discourage litigation by bringing in one common receptacle all the accumulations of past times which are unexplained and have now from lapse of time become inexplicable. It has been said by John Voet that controversies are limited to a fixed period of time, lest they should be immortal while men are mortal". It is a trite law that a statute of limitation is a statute of repose, peace and justice.
30. The Privy Council in White v. Paruthe 1 Kanapp's Privy Council Reports 179 enunciated the principle that if a person is insensible to the value of civil remedies and he is not alert enough to make his claim with promptitude, such a person should not be aided by the State in the enforcement of his claim. This is in keeping with the other Latin maxim Vigilantibus non dormientibusjurasubsvenient. In the instant case it was further pointed out that statutes of limitation serve to ensure private justice, suppress fraud and perjury, quicken diligence and prevent oppression.
31. The object of providing limitation in a statute is to expect litigants to be diligent in seeking remedies in Courts of Law or from statutory authorities. It is to secure the quiet and repose of the community that litigation should not be in a state of constant uncertainty, doubt and suspense.
"Interest reipublicaeut sit finis litium". The interests of the State require that a period should be put to terminate all litigation. Yet another consideration is that a party who is insensible to the value of civil remedies and who does not assert his own claim with promptitude has little or no right to require the aid of the State in enforcing it. "Vigilantibus - non dormientibus jure subveniunt". The law assists the vigilant not those who sleep over their rights. These principles are not mere Iechnicalrules of procedure but based on principles of public policy aiming at justice, the principles of repose and peace. Long dormant claims have often more of cruelty than of justice in them. We do not find ourselves in agreement of enlarging the scope of the principles of justice beyond limitation of time.
It should be restricted to the claim made within statutory period as otherwise it may amount to cruelty than justice to violate the statutory period and attempting granting relief beyond statutory period itself would be contrary to rendering justice rather dong injustice."
19. Similarly, Rajhastan High Court in Commissioner of Income Tax v. Ramesh Chand Soni on September 21, 2004, reported as 194 CTR 84 referred to the following principles:--
15. In taxing statutes, though the period of limitation has not been considered to be statute of repose, but somewhat same position has been accepted. It will be apposite to recall what justice Hidatullah, as his Lordship then was, had said in S.C. Prashar, I.T.O. v. Vasantsen Dwarkadas and others AIR 1963 SC 1356: "...........We wish to say a few words about well known principle that subsequent changes in the period of limitation do not take away an immunity which has been reached under the law as it was provisionally. In this sense, statutes of limitation have been picturesquely described as "statutes of repose"... in our opinion, it is somewhat inapt to describe Section 34 with its amendments and validity as a section of repose. Under that section, there is no repose till the tax is paid or the tax cannot be collected. What the law does by prescribing certain periods of time for acting is to create a bar against its own officers administering the law. It tries to twin between recovery of tax and possibility of harassm ent to an innocent person and fixes a duration for action from these two points of views. These periods are occasionally readjusted to cover some cases which would otherwise be left out and hence, amendments. An assessment can be said to become final and conclusive if no action can touch it, but where the language of the statute clearly reopens closed transactions, there can be no finality."
The Court emphasised that to reopen the closed transaction, there must be clear mandate of statute, otherwise the period of limitation acts as repose."
20. Similar views have been taken by our own Supreme Court bf Pakistan in a recent judgement reported as Khushi Muhammad v. Fazal Bibi (PLD 2016 SC 872) wherein at para 4 (i) and (vi) it has been held as under:-- "(i) The law of limitation is a statute of repose, designed to quieten title and to bar stale and water-logged disputes and is to be strictly complied with. Statutes of limitation by their very nature are strict and inflexible. The Act does not confer a right; it only regulated the rights of the parties. Such a regulatory enactment cannot be allowed to extinguish vested rights or curtail remedies, unless all the conditions for extinguishment of rights and curtailment of remedies are fully complied with in letter and spirit. There is no scope in limitation law for any equitable or ethical construction to get over them. Justice, equity and good conscience do not override the law of limitation. Their object is to prevent stale demands and so they ought to be construed strictly.
(vi) The intention of the Law of Limitation is not to give a right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right"
21. We are also seized of the view that the provisions providing limitation are mandatory and cannot be waived. Reliance is placed on the judgement in the case of The Collector of Sales Tax, Gujranwala, and others v. Super Asia Mohammad Din & Sons and others, reported as 2017 SCMR 1427 wherein it has been held by their Lordships that:-- "...when a statute requires that a thing should be done in a particular manner or form, it has to be done in such manner. But if such provision is directory, the act done in breach thereof would not be void, even though non-compliance may entail penal consequences. However, non-compliance of a mandatory provision would invalidate such act. In this context, reference may be made to the case of Rubber House v. Excellisor Needle Industries (Pvt.) Ltd. (AIR 1989 SC 1160). Thus, having held the first proviso to section 36(3) supra to be mandatory, the natural corollary of non-compliance with the terms would be that any order passed beyond the stipulated time period would be invalid."
22. The principles laid down by the Hon'ble Supreme Court of Pakistan in the above judgment are based on a legal maxim "Expressiouniusest exclusion alteris" meaning thereby that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following other course is not permissible.
23. We also refer to the judgment in the case of Commissioner Income Tax v. Mst. Khursheed Begum reported 1995 PTD 1085 wherein it has been held as under:-- "The law, therefore, does not leave the matter of limitation to the pleadings of the parties as it imposes a duty in this regard upon the court itself. The limitation being a matter of statute and the provisions being mandatory cannot be waived and even if waived can be taken up by the party waiving it-and by the Courts themselves."
24. Besides, in another case reported as Pakistan Ordinance Factories (POF) Wah, Cantt. v.
Collector of Customs, Sales Tax and Central Excise Adjudication., Islamabad and others 2012 PTD 1016 (H.C.Isl.), the Hobn'ble Islamabad High Court held as under: "Government departments could not be put at Higher pedestal in matter of limitation, rather they would be supposed to act within statutory period. Order was barred by limitation in circumstances."
25. Having said that it is our duty to view whether the law relating to limitation has properly been applied, we now turn to a main principle of limitation that limitation to assess tax becomes a past and closed transaction as soon as it runs out.
26. But before we dilate upon this principle in detail, it will be pertinent to specify what retrospective or retroactive law is? A retroactive law is a law that, in respect of past transaction or consideration, does one of the following:-- i. takes away or impairs vested rights acquired under existing laws, ii. creates a new obligation and imposes a new duty/liability, or iii. enhancement/extending of existing obligations, or duties/ liabilities. iv. attaches a new disability.
27. Here, it may be useful to take guidance from the principles regarding prospective and retrospective statutes as discussed by the eminent Jurist of Pakistan, S.M. Zafar in his treatise - Understanding Statutes (third revised edition of 2008). In the said treatise, the concepts have been discussed in Chapter X, which are reproduced hereunder for the ready reference.
"The word retrospective is somewhat ambiguous. Retrospective means looking backward; having reference to a state of things existing before the Act in question. A retrospective statute contemplates the past and gives to a previous transaction some legal effect from that what it had under the law when it occurred or transpired. Corpus Juris defined it as: "Literally defined, a retrospective law is a law which looks backward or on things that are past; a retroactive law is one which acts on things that are past. In common use, as applied to statutes the two words are synonymous, and in this connection may be broadly defined as having reference to a state of things existing before the Acts in question..........."
A statute which operates upon acts and transactions which have not occurred when the statute takes effect, that is, which regulates the future, is a prospective statute. On the other hand, a retrospective or retroactive law is one which takes away or impairs vested rights acquired under existing laws or creates new obligations and imposes new duties or attaches new disabilities in respect of transactions already past. Courts regard as retrospective any statute, which operate son cases or facts coming to existence before commencement of the statute. Where the legislature expressly takes away vested rights from some and correspondingly bestows privileges on others by legislation, the latter is always retrospective."
28. As regards the scope and extent of retrospective legislations, it was explained as under.
"The general principle with regard to the interpretation of statutes is that if a matter in question be a matter of procedure only, the provision would be retrospective. However, if it touches a right in existence at the passing of the Act, then in accordance with a long line of authorities extending from the time of Lord Coke to the present day, the legislation would not operate retrospectively, unless the legislature had either by express enactment of by necessary intendment given to the legislation retroactive effect.
Law cannot be said to be retrospective unless it takes away or impairs a vested right acquired under existing law or creates some obligation or disability with regard to closed and past transaction. However, retrospective operation of statute cannot divert rights already vested in the absence of clear provisions to that effect.
When a statute affects existing rights, its provisions are not to be held as retrospective in operation unless a clear intention to the contrary manifests."
29. Further, explaining the presumptions against retrospectively, the learned Author culled the following principles from various judgments.
"The general rule is that all statutes, other than those which are merely declaratory, or which relate only to matters of procedure or of evidence, are prima facie prospective, and retrospective effect is not to be given to them unless it appears that this was the intention of the legislature. Similarly, the Courts will construe a provision as conferring power to act retrospectively only when clear words are used.
In Reid v. Reid, Bowen L.J said, "the particular rule of construction which has been referred to, but which is valuable only, when the words of an Act of parliament are not plain, is embodied in well known maxim, omnis nova constitution futuristemporibus form an imponeredebet non praetrits- that is except in special cases, the new law ought to be construed so as to interfere as little as possible with the vested rights. It seems to me that even in construing an Act which is to a certain extent retrospective, and in construing a section which is to a certain extent retrospective, we ought, nevertheless, to keep in mind that maxim as applicable whenever we reach a line at which the words of the section cease to be plain. That is a necessary and logical corollary to the general proposition, that you ought not to give a larger retrospective power to a section, even in an Act which to some extend intended to be retrospective, then you can plainly see the legislature meant."
30. In particular, with regard to statutes relating to vested rights, following principles are very relevant.
"Rights which are complete and consummated, so that nothing remains to be done to fix the right of the citizen to enjoy them are vested rights. A vested right may be defined as 'some right or interest in the property that has become fixed and established and is no longer open to doubt or controversy.
A vested right is free from contingencies, but not in the sense that it is exercisable anywhere and at any moment. There is hardly any right, which can be so exercised. There must always be occasions at which and circumstances do not constitute contingencies, but are the peculiar characteristics of those rights.
The rule that statutes should not be given a construction which will give them retrospective effect is, as already indicated, especially applicable to statutes where such a construction will either destroy or impair vested rights. Consequently, such statutes should be construed if possible, as applying only to future cases; that is as having no retrospective operation. In fact, here too, prospective operation is to be presumed............
The rule is founded on the proposition that, since, every citizen is presumed to know the law and to enter into business engagements in accordance with its provisions, it would be unjust, even where the legislature has the power to enact a law with retroactive effect, unless it is clear that such is the legislature's purpose to allow the enactment of legislation to operate in retrospection. Yet, it the intent clearly appears that the statute is to operate retrospectively, even though there the statute becomes invalid, the Court must give it the effect intended by the legislature. In American Judicial system retroactive statute is sometimes treated as no law."
31. Here, it is important to mention that the retrospective operation of an enactment may mean one thing and its affecting the rights of parties another. Normally, an enactment is prospective in nature. It does not affect that which has gone, or completed and closed up already. Ordinarily, the presumption with respect to an enactment is that, unless there is something in it to show that it means otherwise, it deals with future contingencies, and does not annul or affect existing rights and liabilities or vested rights, or obligations already acquired under some provisions of law although its effect is that it does not affect an existing right as well. If an enactment expressly provides that it should be deemed to have come into effect from a past date, it is retrospective in nature. It then operates to affect existing rights and obligations, and is construed to take away, impair or curtail, a vested right which had been acquired under some existing law. If an enactment is intended to be retrospective in operation, and also in effect, the legislature must expressly and in clear and unequivocal language says so in the enactment itself. A retrospective operation is not given to a statute so as to impair an existing right or obligation, otherwise than as regards matters of procedure unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in a language which is capable of either interpretation, it ought to be construed prospectively.
32. Coming back to the principle that limitation to assess tax becomes a past and closed transaction as soon as it runs out, it is more or less universally accepted that amendments in substantive provisions cannot be applied retrospectively, whereas amendments in procedural law can be applied so. There are different interpretations by different jurisdictions as to treatment of time limitation provided under law as substantive or procedural provision. However, it has been held by Courts that if it is treated as procedural, and its retrospective application takes away, destroys or nullifies the vested rights of a litigant, then the old law of limitation would govern the matter and new statute or provision of law introduced by an amendment or otherwise, would not affect the vested rights of a taxpayer.
33. The above principle was iterated by Honorable Supreme Court of Pakistan while announcing the landmark judgment of Eli Lilly Pakistan (Pvt.) Limited reported as 2009 PTD 1392.
34. It was held by Hon'ble Supreme Court of Pakistan that amending the time limit for assessment period/tax period of a taxpayer affects the rights of an assessee/taxpayer and it cannot be applied. retrospectively. The relevant part of the judgment is reproduced below: "However, in our view, the provision 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 assessment will not be opened and amended. Therefore, the section cannot be applied retrospectively unless the legislature has by express words or necessary implication intended to give it retrospective effect. Having anxiously considered the matter, the view we are inclined to take is that the provision is impregnated with the potential of adding to the liability of the taxpayer, therefore, the same is not a mere matter of procedure. It has already been held that the taxpayers, assesses have a right that their assessments will not be reopened after the expiry of the statutory period of five years."
35. Even if a provision is not a substantive provision but a procedural provision, any amendment is not applicable retrospectively where it affects a right already accrued to a taxpayer. The courts have held in various cases that when a time allowed for a particular I I action has elapsed, vested right has accrued to a taxpayer and any subsequent change in law extending the time allowed for the action is irrelevant as the whole affair has become past and closed transaction.
36. Reference is made to the judgment in the case of Shahnawaz (Pvt.) Limited reported as 2011 PTD 1558, wherein the Hon'ble Sindh High Court commented on the concepts of retrospectively, vested right and past and closed transaction in following words;-- "11. The general principles applicable in relation to vested rights, and the extent to which they can be retrospectively affected, are well-settled and have been stated and reaffirmed. many times.
Thus, in the case of Chief Land Commissioner, Sindh and others v. Ghulam Hyder Shah and others reported as 1988 SCMR 715, it has been observed as follows - "In this behalf the High Court proceeded on a correct principle of interpretation that 'no rule of construction is more firmly established than this, that retrospective operation is not to be given to a statute so as to impair an existing right or obligation. The main and primary rule is that every statute is deemed to be prospective, unless by express provision or necessary intendment it is to have retrospective effect. Also the rule that no statute shall be construed so as to have retrospective operation affecting vested rights to a greater extent than its language renders necessary is firmly established." (Para 11)
"There is another aspect of this matter which also fortifies the conclusion stated above. This Court in Province of East Pakistan v. Sharafatullah and others reported as PLD 1970 SC 514 affirmed the established rule that a statute cannot be read in such a way as to change accrued rights the title to which consists in transactions past and closed or in facts which are events that have already occurred. " (Para 13)
The first of these rights is the maximum number of years up to which the audit can be called in relation to a tax year. In our view, this right should be regarded as a past and closed transaction.
The reason is that the 2001 Ordinance, in section 174(3) provides for the number of years for which a taxpayer is required to maintain books and accounts in relation to a tax year. The audit of the income tax affairs cannot be conducted without the records that the taxpayer is statutorily required to maintain. This period must be regarded as becoming fixed for each tax year for the term specified in section 174(3), as this provision stands and applies in relation to the tax year in question. i.e. on the first day next succeeding the last day of the tax year. Since the period becomes 'crystallised' as soon as becomes applicable, it should be regarded as past and closed transactions. (Para 14)"
37. The period of limitation, however, only started when the return was filed and a deemed assessm ent order was issued on 30.10.2008.
38. The learned Counsel of the appellant provided copy of judgment of the Honourable Supreme Court of Pakistan in the Civil Petition No.1306 of 2014 dated 03-09-2014, between the Commissioner of Income Tax v. Major General (R) Dr. C.M. Anwar and others wherein their Lordships dismissed the departmental appeal and upheld the decision of the Honourable High Court, Lahore in a case reported as 2015 PTD 424 as under:-- "The learned High Court while answering these questions has considered the earlier provisions of Section 122(2) of the Income Tax Ordinance, 2001 and taking into account the subsequent amendment brought in the above law by virtue of Finance Act, 2009 has come to the conclusion in paragraphs Nos.8 and 9 of the impugned judgment; that on the basis of the law applicable when the tax return was filed by the respondent, an order of amendment could only be' passed within a period of five years and as per the facts of the case such period ended on 28-09-2009; whereas the show-cause notice in the above context was issued on 13-05-2010. Thus it was categorically held that a vested right has been created in favour of the respondent assessee, which cannot be retrospectively taken away without there being an express intention of the legislature to do so. But the amended Section 122(2) is neither manifest nor unequivocal for such express / clear intention. Learned Counsel for the petitioner has not been able to dislodge the reasoning assigned by the learned High Court in the impugned judgment and we are not persuaded to interfere therewith on the basis of the facts before us. The conclusion drawn by the learned High Court that Section 122(2) as amended by the Finance Act, 2009 shall have no retrospective effect and would not annul the past and closed transaction, when the assessment in favour of the respondent as per the deeming clause under Section 120 had become conclusive and the period for the purpose of invoking earlier Section 122(2) had expired on 28-09-2009, does not call for interference. In light of the above, this petition has no merits which is hereby dismissed."
39. The above principle has been laid down in a number of other judgments of higher appellate forums. The Hon. Supreme Court of Pakistan in the case of Nagina Silk Mill reported as 1963 PTD 633 has held that: "It is a well recognized principle of the law of limitation that once time begins to run from a specified date it cannot be interrupted or extended unless the Legislature intervenes and makes express provision to the contrary."
40. It is clear from the judgment of the Apex Courts that consequent to the amendment in section 122(2) through Finance Act, 2009, the increased time limitation for passing orders contained therein cannot be held as applicable retrospectively.
41. The above principle was emphasized by Honourable Supreme Court of Pakistan in a decision of Commissioner of Income Tax v. Mr. Hakim Ali Zardari reported as 2006 SCMR 170. head notes are produced below for reference purposes:-- "The question of limitation being a matter of statute and provisions thereof being mandatory, can be raised before any forum---same cannot be waived---even if waived could be taken by the party waiving it, and even by the court itself---because matter of limitation would not be left upon the parties, duty is imposed on court to see that proceeding within limitation or not."
42. Besides, it was held in Anwar Bajwa, J. M/s. E.M. Oil Mill and Industries Private Limited Company v.
Commissioner for Workmen Compensation and others reported as 2010 PLC 62 that: "Legislation as interpreted by the Court travels back to wherever in time the Legislation was enacted but the past and closed transaction would be saved."
43. Based on the above principles, Indian Courts have held as under, in Young v. Adams: "retrospective operation ought not to be given to a statute, unless an intention to that effect is expressed in plain and unambiguous language. However, it does not seem probable that the legislature should intent to extinguish by means of a retrospective enactment, rights and interests which might already have vested. The retrospective operation should not be favoured, unless the legislature clearly and distinctly authorizes the doing of something which is physically inconsistent with the existence of an existing right and a statute is not construed to have a greater retrospective operation than what its language renders it necessary, because it may be that the retrospective operation may be partial and not full at some places in the enactment."
Liability for tax and penalty would always remain on the assessee, but if the time prescribed under the Act expires, the liability cannot be imposed by the authorities, the reason being that the assessee should not be subjected to unending hardship.
If the period of limitation has already expired, the amending Act extending the period of limitation does not apply retrospectively.
That even procedural section cannot be given retrospective effect so as to revive a cause of action that had already become barred.
Keralla Oil Mills v. CIT [1980] 121 ITR 254 (Ker.), Saraf Trading Corpn. v. CIT (1980) 123 ITR 159 (Ker.)
CIT v. Sadhu Ram [1981] 127 ITR 517 (P&H), CWT v. Randero Sachedeo [1987] 163 ITR 837 (Pat.)."
44. Amendment in section 122(2) through Finance. Act, 2009 enlarging limitation period effected in the pre-amended section 122(2) cannot be construed to be designed to dismantle and throw apart the edifice of the past actions attaining finality there under as fait accompli at particular point of time. The dead transactions which became past and closed cannot be reversed or revived by dint of or under the garb of subsequent amendment enhancing the period of limitation in the statute.
45. In the recent judgment of the Honourable Islamabad High Court in the Commissioner Inland Revenue v. Oil and Gas Development Company Limited, reported as 2016 PTD 2727, following the above referred judgment of the Supreme Court and certain other judgments, the similar matter was concluded as under:-- "It is obvious from the above that the law by now is well settled and in a case where the assessment order has been passed by the Commissioner, or treated to have been passed by the Commissioner, under section 120 before the amendment was made through the Finance Act, 2009 then the limitation prescribed under the substituted provisions be attracted. As a corollary, the limitation will start running from the date when the order was passed or treated to have been passed, and not from the end of the financial year when such an order had been issued or treated to have been issued. The limitation period as contemplated in section 122(2) as amended by the Finance Act, 2009 is 'impregnated with the potential of adding liability of the taxpayer is not mere matter of procedure'. The vested right of taxpayer, therefore, cannot be taken away retrospectively as the legislature has not expressly intended to do so, as is manifested in the language used in the provision. It is, therefore, obvious and settled that the amended subsection (2) of section 122 of the Ordinance shall not operate retrospectively. At the time when the show-cause notice was issued in the instant case, the assessment order treated to have been passed by the Commissioner under section 120 of the Ordinance, dated 30-12-2006, had attained finality i.e. had become a past and closed transaction and, therefore, it could not have been reopened by applying the limitation period provided in amended subsection (2) of section 122 thus giving retrospective effect. A vested right was created in favour of the respondent company when the limitation had expired under the substituted provision, and the same could not have been taken away by giving the amended provision retrospective effect. There is no force of the argument of the learned counsel for the Department that since the limitation period had not expired under the substituted provision at the time when section 122(2) was amended therefore the later provision should apply. After the period prescribed under substituted provision had expired, the assessment order dated 30-12-2006 had become past and closed transaction, and the same could not have been amended or opened by giving the amendment made through the Finance Act, 2009 retrospective effect, regardless of when the said amendment had taken effect. It is settled law that what cannot be done directly can also not be done indirectly. The learned Tribunal has correctly appreciated the law by following the judgment of the Division Bench of the Lahore High Court in the case of Maj. Gen. (Rtd.) Dr. C.M. Anwar and 2 others supra, which was upheld. The case law relied upon by the learned Counsel of the Department is distinguishable in the facts and circumstances of the instant Reference Application."
46. Here is would be also relevant to refer the judgment of Honourable Lahore High Court in the case of Commissioner Inland Revenue v. Ghausia Builders (Pvt.) Limited reported as the 2015 PTD 772; Honourable Court decided against the petitioner department and held as under:-- "For the purpose of limitation to amend and further amend the assessment order under Sections 122(2) and 122(4) respectively, both aforesaid provisions are more or less identical. Before amendment in year 2009, both these provisions provided limitation of five year for amendment or further amendment of assessment order, after the assessment order has issued or treated as having been issued by Commissioner. However, through the Finance Act, 2009, both these provisions were amended in same fashion whereof limitation for amendment or further amendment of assessment order is to be reckoned from the end of the financial year when assessment order has been passed or treated to have been passed.
The moot question requires determination is whether these amended provision of Sections 122(2) and 122(4) will apply retrospectively. As far as retrospective effect of amended Section 122(2) is concerned, this Court has already authoritatively decided this question in negative in the judgment reported as CIR v. Major General Retd. Dr. C.M. Anwar and others 2015 PTD 424, which was also followed in PTR No.277/2014 titled CIR v. Messrs D.S. Textile Mills Limited and upheld vide order dated 03-09-2014 by the August Supreme Court in Civil Petition No.1306 of 2014 titled Commissioner of Income Tax v. Major General (R) Dr. C.M. Anwar and others; wherein it has been held that amendment in Section 122(2) of the Ordinance through Finance Act, 2009 could not be applied retrospectively and limitation as it stood at the time of filing of return, will be applicable to the case of the taxpayer assessee.
Admittedly, in the present case, income tax return was filed for tax year 2006 and the period of five years limitation in terms of Section 122(2) and Section 122(4) of the Ordinance, relating to tax year 2006, as it then stood expired on 31-12-2011, therefore, the notice dated 22-06-2012 and amendment of assessment order dated 30-06-2012 being after expiry of limitation of 05 years from the date of return were barred by time as per law laid down in judgments referred supra."
47. In a case law in the case of Rooh-ul-Amin Uni Book Agency reported as 2015 PTD 472 (Pesh H.C.) question before Honourable Peshawar. High Court was as to whether the changes made in section 122(2) of the Ordinance through the Finance Act, 2009 and extended time period for passing amended assessm ent order is applicable retrospectively i.e. on assessment or deemed assessm ent order passed before July 1, 2009. The Peshawar High Court answered in the negative on the ground that rights had accrued / matured and previous assessment order has become past and closed transaction. The pertinent part of the judgment is repeated below: "11. Similarly, in the present case, subsection (2) of section 122 of the Ordinance has extended the time period of reopening of an assessment order. The said amendment would not have retrospective effect and would apply to cases in which assessment orders are passed after the date of the said legislation. As far as, assessment orders. which are passed, or deemed to be passed under the enabling provisions of section 120 of the Ordinance, prior to 1-7-2009, the same would be 'closed and past transaction' qua' the applicability of the amended provisions, as valuable rights to favour of the taxpayer would have accrued. Accordingly, the amendment extending the time period to amend the assessment orders. in which 'rights' have matured into vested rights, could not be amended under the extended period provided under subsection (2) of section 122 introduced through Finance Act, 2009."
48. The principle was re-iterated by Honourable Lahore High Court in a decision reported in the case of Azgard Nine Ltd. as 2015 PTD 1068 (LHC) in the following manner:-- "It is settled principle of interpretation of statutes that where time was of the essence to do a particular thing, and on the basis whereof a right had been claimed, the said provision(s) would be of a mandatory nature and if no right was claimed, the provisions would be non-mandatory.
Where public functionaries were empowered to create a liability against a citizen only within the prescribed time, the said time became mandatory which is all the more so, when the prescribed time limit was beneficial to the citizen and restricted the power of the executive/revenue."
48. There is a plethora of case laws elaborating above principle of law relating to limitation of time in tax matters. A few are produced below for reference purposes: 2002 $CMR 39 and PLD 2011 Lah. 323.
"The language of the amending act and the Act and their terms neither make it manifest that the Legislature intended the amendments to operate retrospectively nor the intention can be gathered by necessary implication. The rationale is obvious inasmuch as the amendments have affected vested rights and created new obligations. "
PLD 1970 SC 514 "A statute cannot be read in such a way as to change accrued rights the title to which consists in the transaction past and closed and any facts or events that have already accrued. "
1989 PTD 221 "Statute creating new obligations or affecting existing rights and liabilities of subjects are presumed to be prospective in their operation."
2012 SCMR 965 and 2012 PLC (C.S.) 1285 "Any right or vested interest accrued to a party under a law cannot be snatched away or curtailed by any subsequent amendment in law."
Peshawar Electric Supply Co.
[2017 PTD (Trib.) 1091] "Case was finalized in 184 days; whereas S.11(3) of the Sales Tax Act, 1990, provided a maximum of 30 days to be deducted from the specific period on account of adjustment; while the Commissioner Inland Revenue for reason to be recorded, could extend that period for 60 days---Contention of appellant that order of Commissioner Inland Revenue, extending period to decide by 60 day, did not find mention in the impugned assessment order and in impugned order-in-appeal was right---Section 11 of the Sales Tax Act, 1990 provided a period of 120 days, which could be stretched by another 30 days---(one hundred and fifty days)---Matter in the present case was decided in 184 days---Assessment order, in circumstances, was held to be hit by limitation rendering the same void under S.11(3) of the Sales Tax Act, 1990---Order accordingly."
J.K. Brothers Pakistan (Pvt.) Ltd. 2016 PTD 461 (HC)
"S.11(4)---Amount recoverable with notice---Limitation---Scope---Refund claim of petitioner pertained to tax period of April, 2005 and specified period of five years was to expire in May, 2010 but show-cause notice regarding said refund had been issued on 28-05-2011---Validity--If a law prescribed period of time for recovery of money then after its lapse, recovery was not enforceable---Section 11(4) of Sales Tax Act, 1990 provided a period of limitation of five years for issuance of show-cause notice and notice in present case having been issued after one year of expiry of relevant date was Barred by limitation and thus was without lawful authority and of no legal effect and was liable to be set aside---Constitutional petition was allowed, accordingly."
2006 PTD 537 [Supreme Court of Pakistan] "The provision of subsection (2) of section 36 of the Sales Tax Act, and was called upon to explain as to whether in respect of the year of 1994-95, show-cause notice, dated 12th August, 1999, was within the prescribed limitation i.e. three years. He could not answer satisfactorily. Thus it is held that show-cause notice was served beyond the period of limitation as prescribed in subsection
(2) of section 36 of the Sales Tax Act and as such learned High Court had rightly non-suited the petitioner."
2008 PTD 1973 [Lahore High Court] "Applying above golden principle of interpretation one would be constrained to apply the limitation provided in the S.36(2) which provides jurisdiction for issuance of a notice only for three years prior to the date of such issuance. Going beyond the said limit shall amount defeating the intention of legislature which obviously cannot be allowed."
In fact, this Court has already in its judgment dated 18.09.2007 given in W.P. No.13331/2006 declared the said limit to be as mandatory which cannot be extended beyond the language provided therein by any sales tax authorities. The relevant paras of the said judgment read as follows: "the ratio settled in Re: Juma Khan and others v. Mst. Bibi Zenaba and otheRs. (PLD 2002 SC 823), a case relied upon at the bar for the revenue is clearly distinguishable. In that case, the Honourable apex Court held that the question of limitation would not arise where the "case" related to right of inheritance to ancestral property. The ratio obviously does not help the revenue at all in the case in hand where the issue revolves around the competency and jurisdiction of the revenue to create a liability after the expiry of the statutory period".
"Now I come to the factual controversy. The notice has been issued from 7/2001 to 6/2005 and the date of issuance being 15.06.2006 the same is valid upto 15.06.2003. The period prior to the said cut of date, therefore, has been added without lawful authority. This is obviously exercise of a jurisdiction beyond the mandate of law. It, therefore, provides full room for exercise of the writ jurisdiction by this Court under Article 199 of the Constitution of Islamic Republic of Pakistan.
Consequently, the notice is held be as illegal beyond the said period."
2013 PTD (Trib.) 1246 "The Board had no lawful authority to pass an order of condonation of delay in issue of show- cause notice. Secondly, there no doubt in our mind that the FBR's power to condone a time limit under section 74 of the Sales Tax Act, 1990 only applies to the time limitation for passing an adjudicator order on anything which addresses a genuine difficulty of a taxpayer for example the breach of time limit for filing of a tax returns or refund/input claim and any other act for which an applicant has an otherwise legal right arising from any other provision of the Sales Tax Act, 1990.
This power does not extend to the statutory limitation of time referred to in section 11(4) of the Sales Tax Act, 1990. If FBR's authority to condone a time limit a fundamental as the time limitation provided in section 11(4) of the Sales Tax Act, 1990 is accepted, it will lead to opening of a Pandora box, leading to which hunting of the taxpayers in cases where the FBR's or it sub-ordinate offices failed to take timely action against a taxpayer claimed by them to be in default. Therefore, we condone that the show-cause notice C.No.166 dated 8.11.2012 was issued by the respondent without a lawful authority and that FBR's has no jurisdiction to condone the delay in question under section 17 of the Sales Tax Act, 1990. As result, the entire adjudicator) proceedings in this case at the level of the learned Assessing Officer and later confirmed by the learned CIR(A) are annulled, on the basis of the ratio settled in the cases namely STPRC 0128, 2006 PTD 537 and 2006 PTD 337 decided by the Honourable Supreme Court of Pakistan and 1999 PTD (Trib.) 8, 2008 PTD 1973 and (sic) PTCL 75 decided by the Honourable High Courts of Pakistan."
M.Z. International [2016 PTD 358 (Lah. HC)] "Ss. 11(4) & 36(3)---Order-in-original---Nature---Limitation prescribed by Ss. 11(4) & 36(3) of Sales Tax Act, 1990---Delay of 175 days---Effect---Show-cause notice was issued on 11-5-2009 and order-in-original was passed on 31-5-2010-- Validity---Law required passing of order-in-original within 120 days excluding extended period---Period prescribed by Ss. 11(4) & 36(3) of Sales Tax Act, 1990 for completion of adjudication proceedings was mandatory and not directory---Order in the present case was passed with inordinate delay of 175 days even after excluding period of 30 days for adjournment taken by taxpayer and period of 60 days for extension granted by Department---Extension of time for adjudication granted by Department on 10-5-2010 was patently time barred as limitation provided in S. 36(3) of Sales Tax Act, 1990 had already expired-- -Department had not shown any reasonable justification for such delay in adjudication---Order- in-original dated 31-5-2010 was hit by time limitation as provided in Ss.11(4) & 36(3) of Sales Tax Act, 1990---Order-in-Original was set aside---Constitutional petition was allowed, in circumstances."
2015 PTD 1112 (IRAT)
"Taxpayer raised objection that adjudication/assessment had not been finalized within the period stipulated in Ss.11 & 36 of the Sales Tax Act, 1990 and contended that period of Limitation in a fiscal statute creating liability against a taxpayer, once expired, could not be extended---Validity--- Where issue involved entailed creation of liability against a taxpayer, the period of Limitation was mandatory---Extension given by FBR, having been granted after the expiry of the prescribed Limitation period, was of no avail; and impugned order-in-original passed by Adjudicating Authority, was held to be void as having been passed after prescribed period of Limitation."
2001 PTD 3939 (Kar. HC) (Safdar Perwaiz)
"Contention of the assessee was that R.207A was inserted in the Income Tax Rules, 1982 by Notification No.419(I)/97, dated 13-6-1997 and the same could not be pressed into service with retrospective effect to the prejudice of the assessee---Validity--Since mode of valuation of immovable property as provided under R.207A of the Income Tax Rules, 1982 was not available with the Department in the year' 1994-95 same having been inserted in the Income Tax Rules on 13-6-1997; could not have been applied retrospectively to the assessee's case which was a past and closed transaction by that time---High Court dismissed the departmental appeal in circumstances."
Akhtar Hussain Siddiqui 1999 CLC 951 (Lah. HC)
"After repeal of laws, no authority vests in the Department to reopen matters which had finally been decided and had become past and closed transaction in all respects."
Cement Agencies Ltd. [PLD 1969 (sic) 322] "Decision of Supreme Court-Does not affect past and closed transactions---On basis of judgment pronounced by Court proceedings finally disposed of in accordance with law prevailing at time, cannot be re-opened.
"2016 PTD 272 [CIR v. Oil and Gas Development Co. Ltd.] "12. It is obvious from the above that the law by now is well-settled, and in a case where the assessment order has been passed by the Commissioner, or treated to have been passed by the Commissioner, under section 120 before the amendment was made through the Finance Act, 2009 then the limitation prescribed under the substituted provision will be attracted. As a corollary, the limitation will start running from the date when the order was passed or treated to have been passed, and not from the end of the financial year when such an order have been issued or treated to have been issued. The limitation period as contemplated in section 122(2) as amended vide Finance Act, 2009 is 'impregnated with potential of adding liability of the taxpayer is not mere matter of procedure. The vested right of a taxpayer therefore, cannot be taken away retrospectively as the legislature has not expressly intended to do so, as is manifested in the language used in the provision. It is, therefore, obvious and settled that the amended subsection
(2) of section 122 of the Ordinance, shall not operate retrospectively. At the time when the show- cause notice was issued in the instant case, the assessment order treated to have been passed by the Commissioner under section 120 of the Ordinance dated 30-12-2006 had attained finality i.e. had become a past and closed transaction and, therefore, it could not have been reopened by applying the limitation period provided under the amended subsection (2) of section 122 thus giving it retrospective effect. A vested right was created in favour of the respondent Company when the limitation had expired under the substituted provision, and the same could not have been taken away by giving the amended provision retrospective effect "....
ITA No. 201/KB-2014 dated 10.10.2016 "10. We have heard the arguments advanced by both the representatives and have also perused the available record of the case. We are of the opinion that order passed by the ACIR hit by limitation as pronounced in various judgments of apex courts i.e. Petition No.1306 of 2014 in the case of CIR, RTO, Rawalpindi v. Major General (R) Dr. C.M. Anwar and others dated 03.09.2011 and by this Tribunal reported as 2013 PTD (Trib.) 1169; 2013 PTD (Trib.) 1684; 2015 PTD (Trib.) 434; 2015 PTD (Trib.) 589 and 2015-111-Tax-209. Even otherwise, it looks very odd that proceedings under section 122(5A) commenced in March, 2009 took exceptionally longer period to mature. We desire that administrative authorities may look into the cause of delay as proceedings commenced in March, 2009 could easily be finalized till September 2012 i.e. in Three and Half years before the due date of limitation.
11. Thus we hold the order of ACIR ab-initio illegal and not sustainable in the eyes of law. Therefore, we set aside the impugned orders of both the authorities below and allow appeal of taxpayer on the basis of this legal issue. The factual grounds need no adjudication in consequence thereof.
The issue of time limit under section 122(2) of the Ordinance for passing amended assessment order has come up before the courts for scrutiny in several recent cases which are discussed in detail in below paragraphs."
2012 PTD 1739 (Trib)
"Perusal of the impugned appellate order reveals that the Commissioner (Appeals) has reckoned the date of passing the order under section 122(5A) from the date of issuance of show-cause notice or Tax year 2005 which was dated 18-2-2010. It is ridiculous to reckon the period of limitation from the date of issuance of show-cause notice because that merely indicates the intention of the authority as to whether to proceed against the Tax Payer or not and nothing more.
For the simple reason that if the reply furnished by the appellant is convincing, then the proceedings would be dropped otherwise the proceedings would take its course. Actually the Commissioner (Appeals) has misread and misconceived the law of limitation. Without any shadow of doubt, it is settled principle of law that the period of limitation always runs from the date of passing the order and not from the date of issuance of show-cause notice because that only requires explanation from the Taxpayer. Even otherwise section 122(2) of the Ordinance clearly provides that the assessment order shall only be amended under subsection (1) of this section within the period of five years after the Commissioner has issued or is treated as having issued the assessment order on the Tax payer. If the period of limitation is to be reckoned in view of subsection (2) of section 122 of the Ordinance, then the limitation to amend the order passed by. the Commissioner under section 120 of the Ordinance expires on 31-12-2010, However, that order was amended by the ACIR on 24-6-2011 by inviting the provisions of section 122(5A) of the Ordinance. In this view of the matter, the amending order passed by the ACIR, under section 122(SA) of the Ordinance, is patently hit by period of limitation. So, we feel no hesitation in holding that the order passed under section 122(5A) by the ACIR for Tax year 2005 is barred by time and is not sustainable in the eye of law."
2012 PTD (Trib.) 1936.
"......a right of amendment of assessme nt of the case upto 29th September, 2009 had accrued to the appellant consequent upon filing of return / deemed assessment on 29-09-2004 as per the law then prevailing. The Department could, therefore, complete the amendment upto the above date only. As against this position, proceedings for amendment of assessment under section 122 of the Ordinance were initiated on 13th May, 2010 by issuance of notice under section 122(9) i.e. after lapse of the above stated limitation period as such the proceedings could not be said to be even pending on the promulgation of the Finance Act, 2009 i.e. on 1-7-2009.
In view of the forgoing, we have no hesitation to hold that the impugned amendment order is barred by time and therefore, void ab initio."
2011 PTD (Trib.) 408 "Question of Limitation was not a mere technicality but a matter of compliance of substantive law as vested rights were created in favour of the other party which right might not be taken away from him lightly."
2012 PTD (Trib.) 1268 "Any amendment which deprives a person of his right has to be construed prospectively."
50. Thus, it can be seen from the above discussion that it has long been established and the accepted practice of law for centuries, namely, that when a law is treated as dead, transaction which are past and closed cannot be revived and actions which were either commenced, prosecuted, concluded or become barred by limitation whilst the law was operative cannot be reopened or revived on the basis of subsequent amendment after the lapse of time of existed provision at relevant period which has become as dead transaction and past and closed matter, thus amended law cannot effect any past and closed transactions and the present case was thus covered.
51. We would like to mention here that the above discussion on the limitation may not be confused with interpretation of curative or remedial legislation. The well-settled rule of interpretation is that curative and remedial legislation applies retrospectively to pending cases only. Pending case under the tax laws would mean and include any stage of the proceedings starting from assessing officer to the Supreme Court of Pakistan. However, it may also be noted here that this obviously mean that curative and remedial legislation would not have retrospective application in cases where concerned persons have not challenged the action of revenue authorities before the higher forum and the same is not pending adjudication.
52. An elaborate explanation was given by Honourable Supreme Court in the case of Messrs Pak Suzuki Co. Ltd., Karachi reported as [2016 SCMR 646 (S.C.P.)] : "As a general rule, courts look with favour upon remedial and curative enactments, which were beneficial in nature and were interpreted in the context of the evil to be cured and the mischief to be remedied. ... Provisions of such enactments were to be liberally construed so as to advance the remedy and suppress the mischief and to ensure that the legislative intent, in such behalf, was not frustrated. ... Remedial and curative statutes generally were retroactive in their application and applied to pending proceedings..... In the absence of the express words to the contrary, such enactments should not ordinarily be construed to destroy vested rights, create new liabilities and obligations or disturb past and closed transactions. ... With regard to judgments passed prior to enactment of a remedial or curative statute, the finality thereof may be disturbed and destroyed during the pendency of appeal there-against, if such was the intention of the Legislator, which could be fairly gathered from the express words employed in the remedial or curative enactment."
53. Reliance is also placed on a judgment reported as M/s. Kashmir Feeds (Pvt.) Ltd. [1999 PTD 1655 (Kar. HC)] "Provisions of S.6, Sales Tax Act, 1990 as amended by Finance Act, 1998 though would operate 'retrospectively but it would not affect past and closed transaction ---Importer having opened L.C. much before Notification whereby exemptions of sales tax were withdrawn, transaction of importer had become a past and closed transaction which, even in changed circumstances, could not have effect of taking away vested rights of importers."
54. It is further opined that amendment in section 122(2) through Finance Act, 2009 is not remedial, curative in nature, benevolent or beneficial in the interest of taxpayer nor it is clarificatory, declaratory or rectificatory in nature. In fact, its application for a year covered under pre-amended section 122(2) is prejudicial to the interest of taxpayer and tantamounts to depriving the taxpayer and snatching the vested right of the taxpayeRs. therefore, it cannot be applied retrospectively.
55. Before concluding our judgment, it would be relevant to refer to the Hon'ble Supreme Court of Pakistan's most recent judgment on the above subject in Civil Appeal No. 2148/2016 and others announced on April 4, 2018. The said judgment also revolved around the core question as to whether the provisions of section 122(2) of the Ordinance being procedural in nature would have retrospective effect in case of any amendment considering that limitation provisions are generally considered to be procedural in nature. On behalf of the Department, it was argued in the said case that the limitation provisions are generally procedural in nature and in this regard, reliance was placed on a number of judgments of Apex Court in support of the proposition that any amendment in procedural law is always considered to be retrospective. On the other hand, the taxpayers' counsels mainly placed reliance on the above-referred judgment of Nagina Silk and Major General C.M. Anwar.
55. The Hon'ble Supreme Court addressed the above issue in following words:-- "It is true that on a perfunctory level limitation is purely procedural law. But that is not always so.
Limitation laws by regulating the periods during which particular remedies may be availed do create vested and substantive rights too. The salient features of the law of limitation have been examined in the judgment reported as Khushi Muhammad v. Fazal Bibi (PLD 2016 SC 872) wherein at para 4 (i) and (vi) it has been held as under: "(i) The law of limitation is a statute of repose, designed to quieten title and to bar stale and water-logged disputes and is to be strictly complied with. Statutes of limitation by their very nature are strict and inflexible. The Act does not confer a right; it only regulated the rights of the parties. Such a regulatory enactment cannot be allowed to extinguish vested rights or curtail remedies, unless all the conditions for extinguishment of rights and curtailment of remedies are fully complied within letter and spirit. There is no scope in limitation law for any quitable or ethical construction to get over them. Justice, equity and good conscience do not override the law of limitation. Their object is to prevent stale demands and so they ought to be construed strictly.
(vi) The intention of the Law of Limitation is not to give a right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right"
6. From the ratio of the above judgement it can be seen that the law of limitation in so far as it regulates the period in which one party can avail a remedy against another is not to be lightly disturbed as the certainty created by limitation is necessary for the success of trade and business, the more so when that limitation governs tax matters. In the matters in hand, the respondents, at the time of filing their tax returns were aware that these tax returns may be amended in terms of section 122(5A) of the Income. Tax Ordinance, 2001 at any time up to five years from the date of filing of the tax return itself. Thus, their planning in terms of the irpossible amended and/or revised tax liability would extend for a period of five years from the date of filing of their respective tax returns. After the said five years were up, they could be sanguine that their tax return was now final and they could no longer be burdened with an additional demand. This means that a right related to the law of limitation came to vest in the respondents on the date of filing of their respective returns in terms of the provisions of the original section 122(2). However, the effect of the amendment brought about through the Finance Act, 2009 was to change that original date of commencement of limitation. Instead of limitation commencing on the date of filing of the tax return, 30.12.2008 in the case of appellant in C.A. 2148/2016, limitation was now to commence on the last day of the financial year in which the Commissioner has issued or treated to have issued the assessm ent order to the taxpayer, which in this particular appeal ibid would have been 1.7.2009.
This means that the goal posts themselves were changed by the amendment. It was not that the period of limitation was enhanced to for example 6 years. On the contrary, post amendment too, the limitation period remained five years. Instead, the amended to Section 122(2) of the ITO, 2001 changed the commencement date for when limitation would begin to run. And this was not permissible as certain rights had already come to vest in the respondents on the date on which they had filed the irtax returns under the original Section 122(2) ibid. We are fortified in our view by the ratio of the seminal judgment in Nagina Silk Mills' case (supra) wherein it has been held that: "The limitation in this case under subsection (2) of section 34 of the Act had started running on the 1st of April 1956, and that fixed the terminal date of the period of four years as the 31st of March 1960, with certainty under the law as it then stood. It is a well-recognized principle of the law of limitation that once time begins to run from a specified date it cannot be interrupted or extended unless the Legislature interve s and makes express provision to the contrary. The Courts must lean against giving a statute retrospective operation on the presumption that the Legislature does not intend what is unjust. It is chiefly where the enactment would prejudicially affect vested rights, or the legality of past transactions, or impair existing contracts, that the rule in question prevails. ....... the one that saves vested rights would be adopted in the interest of justice, specially where we are dealing with ataxing statute." [emphasis supplied]
7. Because the terminal date of limitation is not changing through the amendment brought about through the Finance Act, 2009 and because the period of limitation is not being extended per se therefore the authorities cited by the learned counsel for the appellant sare of no avail and are distinguishable. In this view of the matter, hold that the various respondents, who filed their tax returns before the Section 122(2) of the I.T.O., 2001 was amended through the Finance Act, 2009 will be governed by section 122(2) ibid as it stood before the amendment and the amendment brought about in the said section through Finance Act, 2009 dated 30.06.2009 will not be attracted to their cases.
9. For the reasons above, the appeal as also the petitions are dismissed."
57. In view of the aforesaid factual and legal position especially after the recent Judgment of the Apex Court referred hereinabove, we hold that on filing the return of income on 30.10.2008. the appellant had obtained a vested right in the time limitation contained in section 122(2) as it stood at that time i.e. an order under section 122(5A) of the Ordinance could not be issued after expiry of five years from the date of the order sought to be revised. The return of income was filed on 30-10- 2008 being deemed assessm ent on the same date, therefore, as per section 122(2) it could have been amended upto the five years from the date i.e. it could not have been amended after 29-10- 2013. Once the limitation period has already started from a particular date i.e. the date of filing of return, the same could not be assumed to have been extended by subsequent amendment which did not as such, altered the period of limitation rather amended the startirg date of limitation period as the one commencing from the end of the financial year in which the return was filed. As such, the way department has been trying to interpret the provisions of section 122(2) could imply that the limitation period has been extended however the issue here is whether the limitation would be considered as having started from the date of filing of return or from the end of the financial year in which the return was filed. This aspect has been elaborately discussed in the above referred judgment of the Apex Court, which is the authoritative precedent and no deviation from the same can be made.
58. Keeping in view the above facts and circumstances of the case, we have come to the conclusion that the taxpayer is entitled to grant relief from this Tribunal and the department has failed to establish its claim. We are inclined to agree with the findings of the learned CIR(A) which is hereby upheld and the order of Addl. Commissioner Inland Revenue under section 122(5A) for the tax year 2008 is barred by limitation.
59. Resultantly, appeal filed by the revenue is hereby dismissed accordingly.