MUHAMMAD SAJID MEHMOOD SETHI, J.----Through instant Reference Application under Section 133 of the Income Tax Ordinance, 2001 ("the Ordinance of 2001"), following questions of law, asserted to have arisen out of impugned order dated 12.04.2021, passed by learned Appellate Tribunal Inland Revenue, Lahore Bench, Lahore ("Appellate Tribunal"), have been pressed and argued for our opinion:-
1. Whether on the facts and circumstances of the case, the observation of the learned ATIR vide order dated 12.04.2022 that CIR (Appeals) remanded the case is misinterpretation of the order passed by the CIR (Appeals), whereas the order of the CIR (Appeals) dated 31.03.2022 is judicial and well-reasoned taking in view the provisions of Section 128(5) of The Income Tax Ordinance, 2001, wherein the CIR (Appeals) annulled the addition under section 111(1)(b) of the Income Tax Ordinance, 2001 with the direction to the assessing officer for necessary verification?
2. Whether the order passed by the learned ATIR is judicial order in terms of section 24-A of the General Clauses Act, 1897, ignoring the facts and points of law raised before it, which amounts to negation of justice; every judicial order should be a speaking order and particularly in tax matters, where the scope of reference before the Honourable High Court is very limited?
2. Brief facts of the case arc that respondent-taxpayer e-filed return for the tax year 2016 declaring income at Rs.7,539,000/-, which was taken to be an assessment order in terms of Section 120 of the Ordinance of 2001. Taxation Officer issued show-cause notice to respondent-taxpayer, confronting certain discrepancies in its return for the tax year in question and considered deemed assessment erroneous insofar as prejudicial to the interest of revenue and finalized the same under section 122(1) of the Ordinance of 2001, vide order dated 30.11.2021. Respondent-taxpayer filed appeal before Commissioner (Appeals), who vide order dated 31.03.2022, confirmed the addition made under Section 111(1)(d) of the Ordinance ibid, whereas remanded the matter to the extent of addition under Section 111(1)(b) to the assessing officer for de novo proceedings. In second appeal, learned Appellate Tribunal vide order dated 12.04.2022 deleted both the additions made under Sections 111(1)(b) and 111(1)(d). Hence, instant Reference Application.
3. Learned Legal Advisor for applicant-department submits that learned Appellate Tribunal, while passing impugned order, has simply proceeded to delete the additions made under Sections 111(1)
(b) and 111(1)(d) of the Ordinance of 2001 without application of independent judicious mind and giving any valid lawful reasons, that too in absence of the applicant-department, which is violative of Section 24-A of the General Clauses Act, 1897 and law laid down by the superior Courts, thus, same is unsustainable in the eye of law.
4. Conversely, learned counsel for respondent-taxpayer defends the impugned order.
5. Arguments heard. Available record perused.
6. After taking into consideration facts of the case, orders of taxation authorities, impugned order passed by Appellate Tribunal and respective contentions of learned counsel for the parties, we have found that proposed questions have not been correctly formulated, which are reformulated / resettled as under:- Whether in the facts and circumstances of the case, learned Appellate Tribunal was justified to annul the assessm ent order by deleting the addition made under section 111(1)(b) of the Income Tax Ordinance by simply observing that CIR (Appeals) had no power of remand, without discussing its merits?
The above question, in essence, has two dimensions, first whether Commissioner (Appeals) enjoys power of remand under Section 129(1) of the Income Tax Ordinance, 2001. The powers of Commissioner (Appeals) while deciding appeals has been provided in Section 129 of the Ordinance. Clause (a) of subsection (1) of section 129 is relevant to the case in hand, which underwent amendment vide Finance Act, 2005, and in' order to better comprehend its scope and locate the legislative intent, the same, before and after amendment, is to be seen in juxtaposition, which is as follows:- Before Amendment After Amendment
129. Decision in appeal.---(1) In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may---129. Decision in appeal.---(1) In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may--
(a) in the case of an appeal against an assessm ent order---
(i) make an order to set aside the assessment order and direct the Commissioner to make a new assessm ent order in accordance with any directions or recommendations of the Commissioner (Appeals); or
(ii) make an order to confirm, modify or annul the assessm ent order; or(a) make an order to confirm, modify or annul the assessm ent Order after examining such evidence as required by him respecting the matters arising in appeal or causing such further enquires to be made as he deems fit; or
7. It is clear from careful reading of the above that before amendment Commissioner (Appeals), after making observations, could pass direction to the Commissioner to pass fresh assessment order, however such power has been curtailed by way of amendment. Commissioner (Appeals) is only confined to confirm, modify or annul the assessment order after examining evidence which in his opinion is necessary for just decision. Commissioner (Appeals) cannot travel beyond the above scope or pass an order or give any direction which would work adversely against the appellant who had filed appeal against the order of lower authority. The amendment has further authorized Commissioner (Appeals) to undertake further enquiries to ascertain the fa, is rather than remitting the case to a lower forum. The legislative policy behind the aforesaid amendment is to curb prolonged and protracted litigation at the cost and inconvenience of taxpayer.
Moreover, it is well-settled that when law stipulates that something has to be done in a particular manner it has to be done as such and not otherwise. Reference can be made to Assistant Collector Customs and others v. Messrs Khyber Electric Lamps and 3 others (2001 SCMR 838), Khyber Tractors (Pvt.) bd. Through Manager v. Pakistan through Ministry of Finance, Revenue and Economic Affairs, Islamabad (PLD 2005 Supreme Court 842), Shahida Bibi and others v.
Habib Bank Limited and others (PLD 2016 Supreme Court 995), The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others (2017 SCMR 1427) and Federation of Pakistan through Secretary Finance, Islamabad and another v. E- Movers (Pvt.) Limited and another (2022 SCMR 1021).
In the wake of above, we hold that Commissioner (Appeals) lacks jurisdiction to go beyond the scope of Section 129 of the Ordinance of 2001 and remand the matter to lower forum rather is bound to decide the same on merits.
8. Now the question arises what was the right option available with learned Appellate Tribunal once it had come to the conclusion that order of remand of Commissioner (Appeals) was without jurisdiction. We are of the view that the best course was to set aside the remand order and refer the case back to Commissioner (Appeals) to decide it on merits. Under clause (c) of subsection (3) of section 132, the Appellate Tribunal is empowered to remand a case to the Commissioner or Commissioner (Appeals) by issuing directions for making further enquiry or devising a course of action. Undoubtedly, learned Appellate Tribunal had also the power to proceed and decide on merits instead of remitting it back to A Commissioner (Appeals). But in such eventuality, one of the parties would be deprived of one forum and even the Appellate Tribunal would not take the benefit of the views of Commissioner (Appeals) while deciding the appeal. The rationale behind more than one appellate forums under Taxation Laws is to cross check the exercise of powers by the authorities and ensure proper taxation under the statute. However, it is deplorably found that Appellate Tribunal has not exercised its jurisdiction as ordained under Section 132 of the Ordinance of 2001. We have also noted that in most cases, Appellate Tribunals rely on the findings of lower fora and orders are not reflecting application of independent mind and sound reasons. Appellate Tribunals are required to dilate upon all points involved in cases presented before them, after attending the arguments pro and contra, otherwise this Court, in reference jurisdiction, would be deprived of the views of the Appellate Tribunal .
9. In view of the above our answer to the resettled question is in negative. Consequently, orders dated 31.03.2022 and 12.04.2022, passed by CIR (Appeals) and Appellate Tribunal, respectively, are set aside. The matter shall be deemed to be pending before CIR (Appeals), who is directed to decide the same in the light of observations contained hereinabove.
10. Before parting with this judgment, we have noticed that in a number of cases, the Commissioners (Appeals) are remitting the matters to the taxation / assessing officers despite the fact that no such power is vested in them which is causing not only hardship to the taxpayers but also undue loss to the revenue in some cases and wastage of time. Similarly, Appellate Tribunals are annulling not only the remand orders of Commissioners (Appeals) but also the assessment orders on the ground of non-exercise of jurisdiction by Commissioners (Appeals) whereas matters are required to be referred back to Commissioners (Appeals) for decision on merits in accordance with law. Such practice of Appellate Tribunals, being alien to law, is required to be deprecated.
11. This Reference Application is disposed of accordingly.
12. 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.
13. Copy of this judgment be also transmitted to the Chairman FBR as well as Chairman, Appellate Tribunal Inland Revenue for its circulation to all concerned including Commissioners Inland Revenue (Appeals) for its compliance.