NASIR MAHMUD, JUDICIAL MEMBER. Through this appeal Mian Feroze Salah Ud Din "taxpayer" has assailed the order dated 3I.01.2023 recorded by the Commissioner Inland Revenue (Appeals), Lahore.
2. The succinct facts necessary for determination of instant appeal are that taxpayer is an individual and engaged in the business. The taxpayer has filed his return for the tax year 2016 and the same constituted deemed assessment under section 120(1) of the Income Tax Ordinance, 2001 "the Ordinance". The case of the taxpayer was selected for audit under section 214-C of the Ordinance and intimation whereof was given to the taxpayer. The taxpayer failed to submit any record in compliance to the notices for audit and the learned audit officer vide a report dated 09.10.2022 confronted the audit report to the taxpayer. Based on a noted discrepancies, a show- cause notice was issued as to why best judgment assessment may not be made against the taxpayer. The taxpayer failed to respond the same and the assessing officer vide order dated 28.02.2023 determined the total income of the taxpayer at Rs.34,373,831/-. Being aggrieved, the taxpayer preferred first appeal before the Commissioner Inland Revenue (Appeals) "CIRA". The learned CIRA vide order dated 3I.O1.2023 determined the appeal of the taxpayer as follows: "In view of the above narrated situations, you are requested to explain all the above discrepancies.
In case of non-compliance or unsatisfactory reply/explanation, the amount which is not adequately explained is intended to be added in your total income as per situations discussed above.
Through this notice you are hereby confronted that why your income may not be assessed under the section. 121(1)(d) of the Ordinance. Please note that in case you or your authorized representative duly authorized to represent you in the assessment proceedings fails to attend the proceedings/produce the documents/accounts mentioned above, assessment may be framed ex-parte which may also entail further legal punitive actions in accordance with law. Your reply should reach this office on or before the due date mentioned above."
3. Having grouse against the order passed by the learned CIRA the taxpayer instituted second appeal before this Tribunal inter alia on the following facts and grounds;- 1) That the respondent was not justified to pass the said order as no separate prior notice under section 111 was issued to the taxpayer. The same is mandatory for invoking provisions of Section 111(1) of the Ordinance. The same has been settled by Honourable High Court, in its judgments reported as 2019 PTD 1828 and 2021 PTD 192. ii) That the respondent has assessed the exempt income of the applicant on his own estimation the same is against the principals of section 122(8) of the Ordinance. Hence, the additions made there in are void in the eyes of law. iii) That the respondent has passed an order under section 122(1) (Order to amend self or Best judgment or provisional assessm ent) without issuing any notice under section 121 or 123 of the Ordinance. iv) That the Respondent could not have gone beyond the period of 5 years in the case of order passed under section 121 of the Ordinance and could not have gone back from a period of 6 years in case of order passed under section 122 of the Ordinance. Hence the addition made therein are barred by law, hence void. v) That the respondent has passed an order under section 121 (Order to make best judgment assessm ent) of the Ordinance. The same is tarred by law as an assessment order under section 121 can only be issued within 5 years after the end of the tax year or the income year. The tax year in the case relates to tax year 2015 the power to adjudicate under section 121 lapsed on 30.06.2020.
Hence the order herein is void. Section 121(3) is reproduced herein under: "(3) An assessm ent order under this section shall only be issued within five years after the end of the tax year or the income year to which it relates".
4. The learned counsel appearing on behalf of the taxpayer argued that the order passed by the learned OIR as affirmed by the learned CIRA are based on non-appreciation of facts and law. The learned counsel for the taxpayer averred that the question of limitation raised before the learned CIRA has not been determined in accordance with law and the law laid down by the Hon'ble Supreme Court of Pakistan in M/s. Eden Builders case reported as 2018 SCMR 991 has been ignored. The learned counsel further averred that even on facts, the conclusion drawn by the learned OIR as affirmed by the learned CIRA are based on non-consideration of documentary evidence in shape of Iqrar Nama/Agreement executed between one Muhammad Ramzan son of Ahmad Din etc. and Mian Feroze Salah Ud Din, which is self-explanatory and is a registered document. This document is enforceable in Courts of law hence cannot be ignored by the authorities while making assessm ent.
5. The learned DR on the other hand opposed the appeal and argued that the order passed by the learned CIRA is legal and has been passed after taking into consideration the contentions of the taxpayer. The learned DR reiterated the reasons enumerated in the order passed by the learned CIRA and pleaded for dismissal of instant appeal.
6. Heard the parties and arguments have been considered in juxta position to the impugned order.
Perusal of the impugned order reflects that on the point of limitation the learned CIRA has rejected this objection without discussing or determining the dates relevant for determination of question of limitation. There is no cavil to the fact that the limitation is a moot point in any litigation and once it is asserted, it has to be decided on the basis of facts and law laid down by the superior Courts.
Before us, the learned counsel emphatically argued that the order passed by the OIR is barred by time as the order under section 121 could legally be passed by the learned OIR within 5 years after the end of the tax year and or the income year. It is on record that the tax year in issue is 2017 and the limitation to adjudicate under section 121 ends on 30.06.2022 whereas it is an admitted fact that the order under section 121 was passed by the learned OIR on 28.02.2023 and the same is beyond period of limitation so prescribed under section 121(3) of the Ordinance.
7. The issue as regards limitation has been confirmed by the August Supreme Court of Pakistan in case titled "Additional CIR v. M/s. Eden Builders Ltd. and others" reported as 2018 SCMR 991, and the August Supreme Court has held as under; "7. Because the terminal date of limitation is not changing through the amendment brought about through 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 appellants are 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 ITO, 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."
8. We are sanguine of the fact that issue of limitation is not technicality as the same cannot be ignored as August Supreme Court in case titled "Asad Ali v. The Bank of Punjab" reported as PLD 2020 SC 736 has held that; "10. In addition, a perusal of the applications for condonation of delay filed by the Appellants before the High Court which were essentially placed before the Tribunal after transfer of the cases did not disclose any sufficient cause for condonation of delay, let alone explaining every day of delay which is necessary requirement to seek condonation of delay. It is settled law that limitation is not a mere technicality (or a hyper technicality as it had been termed by the Tribunal). Once Limitation expires, a right accrues in favour of the other side by operation of law which cannot lightly be taken away."
The August Supreme Court in another judgment titled "Dr. Muhammad Javaid Shafi v. Syed Arshad and others" reported as PLD 2015 SC 212 laid down law on the issue of limitation and held that it is obligatory upon the court to dismiss a cause/lis which is barred by time even though limitation has not been sot out as defense.
9. The D.R appearing in the instant appeal was confronted with the fact that the controversy and issue having been conclusively determined by the August Supreme Court of Pakistan through its authoritative pronouncements. This Tribunal cannot re-examine the issue already settled and decided by the August Supreme Court and is binding on this Tribunal under Article 189 of the Constitution of the Islamic Republic of Pakistan, 1973.
Since we are deciding the appeal on point of limitation there remains no reason to deliberate on the factual merits of the case.
10. For what has been discussed above, the instant appeal filed by the taxpayer is allowed. We, therefore, annul the orders passed by the learned CIRA dated 31.03.2023 as well as of the learned OIR dated 28.02.2023. We order accordingly.
This order consists of eight (08) pages and each page bears my signatures. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.