MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER.----The above titled appeal has been filed by the appellant tax payer against the impugned order No 28 dated 15.8.2018 passed by the Learned CIR (Appeal -- IV). Karachi.
2. During the course of hearing, at the very outset the learned counsel for the appellant submitted that the Addl.
CIR has passed the order without providing a reasonable opportunity and without serving a valid and mandatory notice on taxpayer /appellant. She contended that the SCN for invocation of section 122(5A) was issued on 28.6.2018 for making compliance 27.6.2018. The learned counsel pointed out that true facts with supporting evidence in respect of tracking record for service was produced by her which shows that the notice was dispatched on 28.6.2018 at 3.34 p.m. for compliance on 27.6.2018. The tracking record shows that booking date 28.6.2018 which was received on 29.6.2018 after passing of the order and after two days for compliance.
No valid and mandatory notice in eyes of law. However, the learned CIR(A) has not adjudicated this dilemma of the department and passed the order without considering the plea of the taxpayer. In this view of the matter she prayed that the orders of the officers below may be vacated as the order was passed without providing reasonable opportunity of being heard (without valid and mandatory notice) to the taxpayer. After receiving the notice on 29/6/2018 the taxpayer approached the tax authorities who had apprised that the order had been passed. Even the order so passed on 30/6/2018 had not been reflected on TAMS official website of FBR. The learned CIR(A) has not adjudicated the grounds taking in respect of non-providing opportunity and the order of Addl. CIR was confirmed by him. The orders of the officers below hence not maintainable in the eyes of law and liable to be vacated.
3. On the other hand, the learned D.R. supported the orders of the officers below but could not rebut and refute the arguments and evidence of the learned A.R. advanced before this Court.
4. We have heard both the learned counsel and perused the records of the case.
5. At the very outset we may deem it proper to reproduce the section 122(5A) and subsection (9) of section 122(5A) as under: "122. Amendment of assessments.- (5:A) Subject to subsection (9), the Commissioner may, after making, or causing to be made, such enquiries as he deems necessary, 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.
(9) No assessment shall he amended, or further amended, unless the taxpayer has been provided with an opportunity of being heard.
A bare reading of the above section clearly shows that the assessment could only be amended if it is found that the deemed order is erroneous and prejudicial to the interest of revenue subject to affording an opportunity of being heard to the taxpayer under subsection (9) of section 122(5A). The Taxpayer has not been provided fair opportunity of hearing as envisaged in subsection (9) of section 122(5A) ibid and had violated the basic judicial principle by not providing reasonable opportunity of being heard. From perusal of the order passed by the ADCIR we have found that the Add. CIR at page 2 vide para 3 observed as under: "Taxpayer had not only failed to submit any reply to the show-cause notice but has also not approached this office to join the proceedings despite the fact that the matter pertains to the tax year 2012, which shall get barred by time by 30th June, 2018."
6. The above observations of the ADCIR clearly depicts the mala fide intention of the officer who wanted to pass the order anyhow by 30th June, 2018 as the time period was running out and the proceedings would become time barred. Due to slackness of the department the taxpayer cannot be penalized and the order in the instant case was passed in haste without adhering to provisions of law.
7. The "fair trial" and "due process of law" as has been guaranteed by the Article 10-A of the Constitution of Islamic Republic of Pakistan. The fair trial consists issuance of notice by the competent authority and after examining the details and documents provided by the taxpayer if any and providing opportunity of being heard.
Article 10-A of the Constitution of Pakistan unambiguously provided that every executive, judicial and quasi judicial order affecting the rights of the citizen should not be passed without providing reasonable opportunity of being heard to the taxpayer. Law has to be applied in its true spirit irrespective of the fact that the assessment is going to be time barred. The taxpayer could not be penalized due to act of the tax department. It has been clearly provided that 15 days time ought to have been given to the taxpayer for submitting reply. In the instant case as per department's own version the department had issued notice on 23-6-2018 for submitting reply till 27-06-2018 and only three days time was given for submitting reply which in fact had not been received by the taxpayer/appellant till the finalization of the proceedings. Hence the ADCIR had not followed the instructions of the FBR issued by C.No. (7)2. DT-14/94 dated 1.2.1994 wherein it had categorically been provided that 15 days clear time be provided to the taxpayer to submit the reply. The order was, thus, passed in haste and in slipshod manner without providing proper opportunity of being heard valid and mandatory notice to the taxpayer.
8. Admittedly, no notice was given for the compliance date as per evidence provided by the Taxpayer. It has now been settled by the superior courts that no adverse order can be passed by the public functionaries more particularly the taxing authorities without being providing reasonable opportunity of being heard to the aggrieved persons. Reliance may be made on judgment of Sahiwal v. Muhammad Akhtar 1971 SCMR 681 their lordships observed as under: "The principle so far as this country is concerned, is accordingly well-settled that where the requirement to be fulfilled to be given by the statute is a mandatory, then the failure to comply with such a mandatory requirement of the statute would render the act void ab initio as being an act performed in disregard of the provisions of the statute." It was further observed by their lordship that any further action taken on the basis of such a void order would also be vitiated and the defect at the initial stage would be incurable by a hearing at a subsequent stage."
In another case reported as 1993 PTD (Trib.) 266 it has been held that no addition is legally sustainable if mandatory requirement had not been complied with. Further it has been held in many cases that if the law requires a thing to be done in a particular manner, it would be legal and valid only if it was done in the manner and not otherwise.
Keeping in view the above ratio, we may observe that it is the fundamental right of the taxpayer to have access to justice, fair and proper trial, due process of law and principle of natural justice. Any aggrieved person cannot be denied to such fundamental rights as guaranteed by the Constitution of Islamic Republic of Pakistan.
9. Here, it would not be out of place to mention that where a law requires a thing should be done in a particular manner unless the same is done in the prescribed manner the same shall be illegal. In case of Khalid Saeed v.
Shamin Rizvi reported as 2003 SCMR 1505 the Hon'ble Supreme Court of Pakistan while considering the impact of violation or non-observance of method prescribed by law for doing any act in particular manner or mode observed that if the law had prescribed method of doing a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted and would be illegal. Following case laws may be cited for ease of reference: Messrs MFMY Industry Ltd. v. Federation of Pakistan 2015 SCMR 1550; Messrs Allah Tawakkal Steel Mill v.
Federation of Pakistan 2016 PTD 1003; Collector of Custom v. Shafiq Traders 2011 SCMR 967; Khalid Mehmood v. Collector 2009 SCMR 1881 and Messrs Shafiq Traders v. Collector 2007 PTD 2092.
10. Even From perusal of the notice under section 122(9) which was served after compliance date, it is apparent that the treatment of Addl.CIR had not been based on any cogent ground or base rather in arbitrary treatment on mere assumption and presumption. The Hon'ble Lahore High Court in the judgment reported as 2013 PTD 1536. = PLD 2013 Lah. 634 where their lordship observed as under: "Show-cause notice is not a casual correspondence or a tool or license to commence a roving inquiry into the affair of the taxpayer based on assumption and speculation but is a fundament document that carries definitive legal and factual position of the department against the taxpayer."
In the following judgments the Hon'ble superior courts have held that it is pre-requisite of show-cause notice that it must supply ground/reason in clear and explicit words to the taxpayer the provisions of law being invoked against it and failure on the part of tax authorities render the notice under section 122(9) as invalid: 2006 SCMR 1519 (Caltex); 2014 SCMR 154 = 2014 PTD 215 CIR v. Ayesha Wollen Mills (Pvt.) Ltd.; 2010 PTD 1315; 2002 SCMR 122 Sardar Ahmed Khan Jogezai v. Province of Balochistan.
The above ratios have settled that any order which suffers from patent illegalities or is without jurisdiction, deserves to be knocked down as held by the Hon'ble Apex Court in the following judgments: PLD 1958 SC 104, PLD 1973 SC 1973, 2003 SCMR 50, 2004 SCMR 25 and 2004 SCMR 1790.
11. For taking any adverse action, affording of an opportunity is prerequisite. An order affecting the rights of a party cannot be passed without an opportunity of hearing to that party. There are certain basic norms of justice.
One of the cardinal principles of such basic norms is \ that one cannot be a judge in his own cause. The breach of the said cardinal principle or jurisprudence will in fact be violative of the right of a access to justice to all which is a well-recognized inviolable right enshrined in Article 4 of the Constitution of Islamic Republic of Pakistan.
This right is equally founded in the doctrine a due process of law. The right of access to justice includes the right to be treated according to law, the right to have a fair and proper trial.
Similarly, the Hon'ble High Court Lahore High Court in the case reported as 2016 PTD 2422 (H. C. Lahore) on the subject stated: "9. As mandatory notice was not issued, the entire subsequent proceedings and orders become illegal and wholly void. In the given circumstances, the learned CIT(A) and learned Tribunal were required to accept the declared version of the taxpayer instead of remanded the case back to the assessing officer to fill in the defects and lacuna in the assessment order. In similar situation, the august Supreme Court in case Commissioner of Income Tax v. Messrs Ayesha Woollen Mills (Pvt.) Ltd. (2014 PTD 215) accepted the declared version of the taxpayer on the ground that no notice was issued and assessing officer without pointing out any defect in the books of account rejected the same.
10. In view of the above discussion and law laid down by august Supreme Court as well as by this Court, the questions raised above are answered in negative. Resultantly, the declared version for both assessment years of the taxpayer shall be accepted. These reference applications are allowed in favour of applicant/taxpayer in the terms stipulated above.
In another judgment reported as PLD 1965 SC 90 the Apex Court held that: Held, that "in all proceedings by whomsoever held, whether judicial or administrative, the principles of natural justice have to be observed if the proceedings might result in consequences affecting "the person or property or other right of the parties concerned." This rule applies even though there may be no positive words in the statute or legal document whereby the power is vested to take such proceeding, for, in such cases this requirement is to be implied into it as the minimum requirement of fairness.
12. We are therefore, of the considered opinion that any order without providing (being heard) personal hearing is void as held by the Hon'ble Lahore High Court in the case of Mohsin Raza v. Federation of Pakistan reported as 2009 PTD 1507. The relevant extract of which is reproduced hereunder.
"An adverse order made without affording an opportunity of personal hearing is to be treated as a void order. It is because of this reason that Hon'ble Supreme Court of Pakistan has always laid its utmost stress on strict observance of norms of natural justice in general and the principles of audi alteram partem in particular.
These principles are to be read into every statute. Reliance in this regard is being placed on PLD 2008 SC 663, 2007 SCMR 330, 2005 SCMR 678, 2005 SCMR 1814 and PLD 2004 SC 441."
We may also rely on the judgment reported as 2007 PTD (Trib.) 2601. The relevant extract of which is reproduced as under:
16. The upshot of the above discussion therefore is obvious. The jurisdiction in this case could only be acquired by the Taxation Officer after receiving of an information from the audit department by issuance of an notice under section 122(5). Since said notice have not properly been issued for acquiring jurisdiction over this case, one cannot agree with the department that the subsequent proceedings are justified".
13. Reliance may be made on judgment of the Tribunal reported as 2012 PTD (Trib.). 312 whereby the learned Tribunal has cancelled the order passed under section 122(1) by the DCIR as statutory notice was not served upon the taxpayer. The relevant portion of which is reproduced below: "Proper service of statutory notices---Revenue contended that First Appellate Authority was not justified in treating the service of statutory notices under S.218 of the Income Tax Ordinance, 2011 as improper and annul the order passed under S.122(1) of the Income Tax Ordinance, 2001 merely on technical grounds---Taxpayer contended that notice issued were not properly served and opportunity of being heard was not provided to explain the source of investment: and taxpayer had valid source to explain the source of investment; and taxpayer had valid source to explain the investment---First Appellate Authority had given a categorical finding that the notice issued were not property served and the assessment had been made without providing reasonable opportunity of being heard to the taxpayer--Assessing Officer failed to serve statutory notice in accordance with law---First Appellate Authority was justified to cancel the assessment made under S.122(I) of the Income Tax Ordinance, 2001---Appeal filed by the Revenue was dismissed being devoid of any merit.
14. Last, but not the least, we may also rely on the latest judgment of Hon'ble High Court of Sindh at Karachi reported as 2017 PTD 1839 titled as The Commissioner Inland Revenue, Zone-I, RTO, Sukkur v. Messrs Ranipur CNG Station, Sukkur whereby the Hon'ble Judges their lordships Mr. Justice Aqeel Ahmed Abbasi and Mr. Justice Nazar Akbar, observed that no specific notice served on Taxpayer, the addition so made was deleted.
In Civil matters principles of natural justice has always been enunciated, reliance is placed on the judgment reported as under: Natural Justice----petitioner society being allottee of the property was entitled to a notice and opportunity of hearing--- from the record it appears that no notice of cancellation of allotment of disputed property was ever issued---Petition allowed. Messrs Yasmeen Abbasey and Anwar Zaheer Jamali, J.J. Anjuman Jamiat-ul-lkhwan v. Karachi Building Control Authority and others 2006 YLR 1395.
Natural Justice----Principles of---Servants of Statutory Corporations---- Any action in violation of principle of Natural Justice would be illegal. Azizullah M. Memon and Khalid Ali Z. Qazi, JJ. Zafar Ahmed Khan v.
Federation of Pakistan and others 2009 PLC (C.S.) 415.
"Principle of natural justice has to be applied strictly in all kinds of proceedings and any departure therefrom would render illegal the subsequent actions. Agha Rafique Ahmed Khan, CJ and Syed Afzal Haider, J, Mst.
Sadia Javed v. Shahid Khan Khakwani and others SBLR 2011 FSC 1.
Principles of Natural Justice--- Section 10(3) of IRO, 1969 (old/repealed IRO)-When a vested right is affected by an order without a show notice, such order would be unlawful, consequently struck down. Shabbir Ahmed and Khilji Arif Hussain, JJ. Precision Rubber Products Labour Union v. Messrs Precision Rubber Products (Pvt.) Ltd. and others. SBLR 2004 Sindh 1599 "Norms of Justice and fair play--The circumstances as pleaded show that employee was treated inhumanly, harshly, unjustly while not considering his lawful request for the grant of leave, out of available leave, and the dismissing him from service. Akhar M. Memon and Barkat Ali Baloch, Members. Rizwan Mustafa v. Messrs Oil and Gas Development Company Limited and another 2005 PLC (C.S.) 39 Administration of Justice-- When there is a conflict between a basic natural right born out of natural justice and a provision of law, general or special, it is settled that the former shall prevail. Yasmin Abbasey and Mehmood Alam Rizvi, JJ Imran Ahmed Khan v. PIAC 2008 CLC 697 --Civic Agencies and public authorities are repositories of public trust. They are required to act honestly and fairly. Dispensation of Justice is not the exclusive function of Courts of Law. Public Functionaries, in discharge of their duties, are required to act fairly, equitably, diligently and to avoid myopic approaches--guidelines laid down. Mushir Alam and Muhammad Afzal Soomro, JJ. Messrs Karim Bidi Works v. City District Government and another 2007 CLC 1952.
Administration of Justice-Public Functionaries-Public functionaries were duty bound to decide representations of their subordinates within reasonable time---No body should be penalized by inaction of public functionaries-- Public functionaries were supposed to decide representations of their subordinates with reasons, without fear, favour, nepotism and within reasonable time. Justice (Retd) Ghulam Nabi Soomro, Chairman, Qazi Qammaruddin and Mrs. Akhtar A. Choudhary, Members. Dr. Saleemullah v. Chief Secretary, Sindh and others.
SBLR 2010 Tribunal 143/G Administration of Justice--Orders--Order must be a reasoned and speaking order a sketchy order would be no order in the eye of law. [(Anwar Zaheer Jamali, J.), Dy. Administrator Evacuee Trust Property Board v. Mst. Huma Bai; 2004 MLD 376
15. It may be further observed that in view of the Article 10A of the Constitution and Section 24-A of the General Clauses Act, every public functionary, including the Taxation Authorities, are required to provide fair opportunity of being heard to any person before taking an adverse action against him, or passing any order of assessment or creating any additional liability of tax, by confronting such person with the proposed action in writing. The fair trial and right of hearing is regarded as a cardinal principle of Natural justice which has to be read into every Statute, even if it may not be specifically provided therein. There is a gross violation of due process of law in the case of the Taxpayer as no show-cause notice was served on due date to the appellant. The Hon'ble Lahore High Court in the case of Ahmad Hassan Bucha v. Chairman NADRA and others wherein their lordship were pleased to observe that "due process of law has been recognized as a constitutional guarantee by most of the countries in their constitutions. In the Constitution of the Islamic Republic of Pakistan, 1973, through Eighteen Amendment Act X of 2010. Article 10-A was added as a fundamental right. The concept of "due process of law" is already covered in Articles 4, 9, 10 and 25 of the Constitution of Pakistan, 1973 but Article 10-A has been added as a fundamental law in the constitution." Therefore, the issuance of Notification issued by the Ministry negates Article 10-A of the Constitution of the Islamic Republic of Pakistan, 1973, which is the supreme law of the country and any law repugnant to Constitution is null and void having no legal effect. In the case reported as 2000 PLC (C. S.) 295 (S.C.) it was held that Provision of section 17(1A) of West Pakistan Water and Power Development Authority Act, 1958, (para materia to section 11 of Civil Servants Act, 1973) had provided that Authority could terminate services of civil servants after informing civil servants in writing of grounds of which action of termination as proposed to be taken and after issuing them such show- cause notice. No such procedure having been adopted by Authority while terminating services of civil servants, order of the Authority was rightly set aside by Service Tribunal and Civil Servants were rightly ordered to be reinstated in services. In the case of Engineer Majeed Ahmed Memon v. Liaquat University of Medical and Health Science Jamshoro and others, reported as 2014 SCMR 1263 the Hon'ble Apex Court held that: "Accused Civil Servant was employed on probation at a university -- Accused employee during his service was alleged to have made certain purchases for the university without proper tendering. --Enquiry committee conducted its preliminary enquiry. Even though accused was a probationer, his services could not have been terminated without holding a full-fledged enquiry in which accused would have an opportunity to defend himself on the allegations made against him in the show-cause notice.
In another case of Muhammad Sagheer v. Chairman TEVTA and another reported as 2013 CLR 161 it was held that TEVTA contract employee cannot be terminated without affording opportunity of hearing.
Termination of employment without affording opportunity of hearing to employee or adopting due process of law is clear violation of Constitution as it amounted to depriving a person of his livelihood.
We are, therefore, of the considered opinion that the impugned order was passed without providing / affording opportunity of being heard, hence violated the well known principle of "Audi alteram partem" as enunciated by the higher judicial fora in numerous cases. After amendment of 18th Amendment whereby vide Article 10A of the Islamic Republic of Pakistan every aggrieved person against whom the order is passed. The impugned order was passed in a manner completely without jurisdiction unlawfully, unconstitutionally, malafidely, without serving any Notice, well in time, in breach of natural justice and in violation of inter alia, Article 10-A of the Constitution.
16. In addition thereof the order passed under section 122(5A) is not in strict compliance of the provision and the procedure provided in statute and lacks jurisdiction and flagrant violation of mandatory provision. Here, it would not be'out of place to mention that where a law requires a thing should be done in a particular manner unless the same is done in the prescribed manner the same shall be illegal. While considering the impact of violation or non-observance of method prescribed by law for doing any act in particular manner or mode observed that the law had prescribed method of doing a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted and would be illegal. In addition thereof the amended assessment is not in strict compliance of the provision and the procedure provided in statute and lacks jurisdiction.
17. Before parting with this judgment we may observe that: No tax shall be levied or collected except by authority of law. A tax can only be imposed by a legislative Act and not on executive order. It thus embodies the democratic principle "No taxation without representation". The law imposing a tax must be a valid law, that is, it should not violate any provision of the Constitution and should be within the legislative competence of the legislature. It will be valid only if it is made in accordance with the procedure prescribed by the statute.
This Court cannot hold that the revenue Departments was constitutionally free to ignore all the procedures of the law and power to tax is not power to destroy. Who will sympathize with the Revenue Officers for impatient commitment to their cause for achieving the budgetary target and ought not to try culled out budgetary targets of revenue from arties of taxpayer but must respect to judicial process which rightly termed a small price to pay for the civilizing hand of law, which alone can be given abiding meaning to constitutional freedom. "The law makes no difference between great and petty officers; thank God, they are all amenable to justice."
18. Accordingly the orders of the officers below are vacated and the appeal filed by the taxpayer succeeds.