SHAHID JAMIL KHAN, J. This judgment answers the following question in Affirmative, i.e., against the applicant taxpayer; "Whether Commissioner Inland Revenue can delegate, under Section 210, his powers to amend or further amend, under Section 122(5A) of the Income Tax Ordinance, 2001, when the law envisages consideration by the Commissioner?"
2. Through instant Reference Application under Section 133 of the Income Tax Ordinance, 2001 ("Ordinance of 2001"), two legal questions are framed: one is for exercise of jurisdiction by Additional Commissioner under Section 122(5A) of the Ordinance of 2001, which undeniably is settled by August Supreme Court in favour of Revenue. Second question relates to the interpretation of Section 210 read with Section 122(5A) of the Ordinance of 2001.
3. Learned counsel for the applicant emphasized that the use of word "consideration" in Section 122(5A) to contend that consideration is required to be made by the Commissioner himself, therefore, it cannot be delegated under Section 210 ibid. To support his assertion, learned counsel has referred to Section 66A of the Repealed Income Tax Ordinance, 1979 ("Repealed Ordinance").
4. Heard.
5. Sections 122(5A), 210 of the Ordinance of 2001 and Section 66A(1) of the Repealed Ordinance are reproduced:- "122. Amendment of assessments.-- .....
(5A) Subject to sub-section (9), the Commissioner may amend, or further amend, an assessment order, if he considers that the assessm ent order is erroneous in so far it is prejudicial to the interest of revenue."
"210. Delegation.--(1) The Commissioner subject to sub-section (1A), may, by an order in writing, delegate to any Officer of Inland Revenue, subordinate to the Commissioner all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than the power of delegation.
(3) The Commissioner shall have the power to cancel, modify, alter or amend an order under sub- section (1)."
(emphasis supplied)
"66A. Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order.-(1)
The Inspecting Additional Commissioner may call for and examine the record of any proceedings under this Ordinance, and if he considers that any order passed therein by the Deputy Commissioner is erroneous in so far as it is prejudicial to the interests of revenue, he may, after giving the assesse an opportunity of being heard and after making, or causing to be made, such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessm ent to be made."
(emphasis supplied)
6. This Court is not convinced with the argument, because the scheme of law under the Repealed Ordinance was different. The powers under Section 66A were supervisory in nature by an officer (Inspecting Additional Commissioner) ("IAC") higher in the hierarchy, who could call the record on its own for examination and pass appropriate order if assessment or portion of assessment was found erroneous and prejudicial to the interest of revenue. He was also vested with the power to remand the case back with direction to the assessing officer for passing the order afresh, after cancelling the assessm ent order. The term Power under Repealed Ordinance was of enhancing, modifying and cancellation of the assessment order passed, whereas, under existing law the power with the Commissioner or delegate is of amendment of an order taken to be passed by operation of law. Under Section 65 of the Repealed Ordinance, the assessment already made under Section 62 could be re-assessed on the basis of a definite information and by the assessing officer himself whereas under Section 66A, the IAC had supervisory powers.
Erstwhile scheme is different from the scheme under the Ordinance of 2001, wherein, the taxpayer is authorized to make his own assessm ent. The declaration made in accordance with law is taken to be the assessm ent order under Section 120 for all purposes of the Ordinance. The assessment by operation of law can be amended under Section 122(1) or 122(3) read with subsection (5) or (5A) of Section 122 of the Ordinance of 2001. The subsection (5) contains the reasons similar to the erstwhile Section 65, of definite information and for invoking subsection (5A), deemed assessment should be erroneous and prejudicial to the interest of revenue, which is the only similarity. The most important distinction is that the Ordinance of 2001 recognizes only the Commissioner as an officer conferred with the powers and functions under different provisions of the Ordinance of 2001.
Further, to make the machinery workable, the powers envisaged to be exercised by the Commissioner are allowed to be delegated to other taxation officers read with the conferment of jurisdiction under the relevant provisions. The law dealing with the delegation of power is not alien to the jurisprudence under taxation and other laws. Basic restriction is that the power of delegation cannot be further delegated and this restriction is enforced in Section 210(1) by using the phrase "other than power of delegation". The Commissioner can delegate all or any of its powers and functions to any other taxation officer meaning thereby that the notification or order of delegation shall determine the extent of power to be exercised by the delegatee taxation officer. Section 122(5A) has to be read with Sections 210 & 211 of the Ordinance while conferring power of amendment or further amendment on the ground of erroneousness and prejudicial to the interest of revenue, which cannot be divided between consideration and passing final order.
7. The other principle under the doctrine of delegation is that the delegatee is not absolved of the responsibility after delegation of the power and functions conferred by the statute/law. This aspect is taken care of through the provisions under Section 211 of the Ordinance of 2001. For ease of referenced, Section 211 ibid is reproduced hereunder:- "211. Power or function exercised. --(1) Where, by virtue of an order under section 210, an officer of Inland Revenue or by a special audit panel appointed under sub-section (11) of section 177 exercises a power or performs a function of the Commissioner, such power or function shall be treated as having been exercised or performed by the Commissioner.
(2) The exercise of a power, or the performance of a function, of the Commissioner by an officer of Inland Revenue shall not prevent the exercise of the power, or the performance of the function, by the Commissioner.
(3) The Board or, with the approval of the Board, an authority appointed under this Ordinance, shall be competent to exercise all powers conferred upon any authority subordinate to it."
(emphasis supplied)
The interpretation, as being sought, is not only against the text of the afore-referred provisions but would cause unnecessary technicalities, making the procedure cumbersome. It is not applicant's case that power to amend or further amend under subsection (5A) cannot be delegated. The only objection is that power of consideration to see whether the assessment order is erroneous and prejudicial to the interest of revenue, cannot be delegated. If this argument is accepted, the practical difficulty would be that in each case, two orders would be passed; one by the Commissioner of its consideration and then matter would be delegated for passing a final order. If mind has already been applied to determine erroneousness and prejudice to revenue by the Commissioner, then there would be no need to delegate the matter for passing final order.
8. At this stage, Mr. Muhammad Yahya Johar, Advocate / Legal Advisor, appearing on Court's call, has apprised that the issue involved has been settled by the learned Islamabad High Court in Pakistan Tobacco Company Ltd. Islamabad v. Addl. Commissioner (Unit-II), Taxation Officer, Large Taxpayers Unit, Islamabad [(2013) 107 TAX 29] as well as by learned Sindh High Court in Messrs Shell (Pakistan) Ltd. through Associate Legal Counsel v. Pakistan through Secretary Revenue Division and 2 others (2013 PTD 1012). He has read following part of the judgment in Pakistan Tobacco Company's Case, (supra):- "10. As far as delegation of powers is concerned, sub section (1) and (1A) of section 210 ibid, being relevant are reproduced hereinbelow: "210. Delegation.--(1) The Commissioner subject to sub-section (1A), may, by an order in writing, delegate to any Officer of Inland Revenue, subordinate to the Commissioner all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than the power of delegation.
(1A) The Commissioner shall not delegate the powers of amendment of assessment contained in sub-section (5A) of section 122 and amendment of an order of recovery under sub-section (3) of section 161 to an officer of Inland Revenue below the rank of Additional Commissioner Inland Revenue."
Sub-section (1A) of section 210, is to be read with section 122(5A) of the Ordinance. The power of amendment is provided in section 122(5A) and this section does not bifurcate the power of amendment into powers and functions. The exercise of this power is only subject to Section 122(9) and it has been provided in sub-section (5A) as well as in section 210(1A) ibid. Section 210(1A) provides that the Commissioner can delegate his powers of amendment as provided in sub section (5A) of section 122, to Additional Commissioner and since sub section (5A) provides that the powers of amendments can be exercised only subject to sub section 9; so, the functions of the Commissioner Income Tax, to provide an opportunity of hearing to the taxpayers also stands delegated to the Addl. Commissioner.
11. The objection that the Commissioner cannot delegate his authority to his subordinate again is not correct for the reason that section 211 of the Income Tax Ordinance, 2001 provides that the powers exercised by the Addl. Commissioner shall be deemed to be exercised by the Commissioner. As such by a deeming clause, the law provides that the order of Addl.
Commissioner shall be considered as passed by the Commissioner. The conclusion thus would be that when Commissioner delegates powers to amend the assessment to the Addl. Commissioner; the said powers include the functions of the Commissioner i.e. scrutiny of the assessment, proper application of mind and then amending the Assessment Order."
9. Concurring with the above findings of learned Islamabad High Court, we add that the powers under Section 122(5A) cannot be divided. Subsection (1) of Section 210 is the main section which allows delegation of all or any powers and functions unequivocally. In subsection (1A) of Section 210 ibid, the phrase "power" is used to curtail delegation to an officer lower than the Additional Commissioner. We agree with the opinion by learned Islamabad High Court that word "power" used in subsection (1) includes functions as well because subsection (1A) is subsidiary to subsection (1) of Section 210 of the Ordinance of 2001 and both are to be read together.
10. In view of the above, question, supra, is answered in affirmative.
This Reference Application is decided against the applicant-taxpayer.
11. Office shall send a copy of this judgment under seal of the Court to the Appellate Tribunal as per Section 133(5) of the Ordinance of 2001.