DR. SHAHID SIDDIQ, ACCOUNTANT MEMBER.----Through the instant MA(R) the Applicant seeks rectification in Tribunal's Order dated 8-9-2021 passed in I.T.A. No. 3117/LB/2020, pertaining to the Tax Year 2014.
2. Background of the case is that this Applicant filed appeal against the CIR (A)'s Order No. 20, dated 15.10.2020, which has been decided by the Tribunal vide Order dated 08.09.2021 in the following manner-- "6. We have given due consideration to the arguments put-forth by both the parties and perused the relevant available record. The learned AR through his grounds has raised various legal and factual objections in the orders of authorities below. Regarding legal objections, the AR has assailed the orders of authorities below before us on the same grounds as raised before the CIP(A).
The CIR(A) has effectively and rightly turned down legal objections of appellant. We have observed that the OIR has made addition on the basis of agreement to sell produced by the Mr. Saadullah Khan dated 21.11.2013. However, it was contended by the AR that the copy/ of agreement to sell a plot dated 21.11.2013 is fake and forged as neither it contains the genuine signatures of M/s. Muti-ur- Rehman, nor the consideration of Rs. 45,400,000/-. He explained that plot was neither liable to be disclosed in the wealth statement of taxpayer on 30.06.2014, nor in the balance sheet of M/s. Sky Heights Builders and Developers (Pvt.) Ltd., Lahore as on 30.06.2014 because the same had been sold on 14.03.2014. It was claimed by the appellant that the said plot was not transferred in the name of taxpayer rather it was sold by him on 14.03.2014 to Mr. Latif Hakeem son of Mr. Hakeem Khan, resident of House No. 30-D, Circular Lane, University Town, Peshawar as per transfer letter Sr.
No. 40127 dated 10.04.2014. In these circumstances, we are of the view that lot of information in the shape of detail documentation is available on record whose genuineness needs to be ascertained as well as the transfer of funds through banking channel needs to be probed, therefore, we deem it appropriate to remand the case back to the OIR with the directions to decide the case afresh after affording proper opportunity of being heard to the appellant/(sic) said plot was sold on 14.03.2014 to Mr. Latif Hakeem son of Mr. Hakeem Khan resident of House No. 30-D, Circular Lane, University Town, Peshawar as per transfer letter serial No. 40127, dated 10.04.2014 with documentary evidence.
We order accordingly.".
3. Main grievance of the learned A.R. is that this Tribunal, without dilating on the legal issues raised through the Grounds of Appeal, has arbitrarily and illegally held as under:- "6....Regarding legal objections, the AR has assailed the order of authorities below before us on the same grounds as raised before the CIR(A). The CIR(A) has effectively and rightly turned down legal objections of appellant". which, according to the learned AR, could not be done without dilating on the legal issues urged before this Tribunal.
In support of his assertion, the learned AR has relied on the Hon'ble LHC's Judgment in ITR No. 41041 of 2022, dated 22.09.2022, which says that: "8 ....... .We have also noted that in most cases, Appellate Tribunals rely on the finding 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.".
4. Besides the above-reproduced objection, the learned A.R. has also pointed out that the OIR had taken the base income of Rs.75,346,712 assessed under section 122(5A) of the Income Tax Ordinance, 2001, which had been annulled by the learned CIR(A-II), Lahore vide Order No. 03, dated 01.08.2017 restoring the originally assessed income at Rs.5,719,870, but this Tribunal, despite mentioning this Ground in Para 4 of the impugned Order, omitted to give any finding thereon.
5. As to the upholding of the learned CIR(A)'s findings on the legal issues, the learned A.R. pointed out that the legal Grounds taken by this Applicant / Appellant rested on the binding precedents of this Tribunal as well as higher judicial fora; to which the learned CIR(A) could take no exception. He had no alternative except bowing before the verdicts cited at the bar. Thus, by upholding the learned CIR(A)'s findings on the legal issues, this Tribunal not only negated its earlier decisions of the Benches of equal strength, but also perpetuated the illegal findings of the learned CIR(A), which caused a serious prejudice to this Applicant / Appellant's cause.
6. In response to our query that when we have remanded the matter to the OIR, this Applicant can raise all the issues before the OIR, the learned A.R. adverted our attention to the fact that when this Tribunal had maintained the adverse findings of the learned CIR(A) on all the legal issues, this Applicant / Appellant had been deprived of his right to take the same legal objections before the OIR.
7. The learned D.R. has opposed the rectification application on the plea that it would amount to "review" of the earlier Order of this Tribunal, whereas this Tribunal is not vested with the power of review.
8. We have given due consideration to the arguments put forth by the learned AR as well as D.R. and perused the relevant available record. The AR contended that the scope of rectification is not so narrow, as being misconceived by the learned DR. It extends to rectify errors of law as well as facts. The implementing Authority under the Income Tax Ordinance, 2001 the FBR., has also deprecated narrow interpretation of the power of rectification in its Circular No. 10 of 1960, dated 14.07.1960 as under:- "The Board have noticed that some officers give a very narrow meaning to Section 35 of the Income-tax Act. They think that only mistakes apparent on the face of the records and errors of clerical or arithmetical nature can be rectified under section 35. This is wrong. Section 35 is much wider in its application."
The Hon'ble apex Court of Pakistan has dwelt on the issue of "mistake apparent from record" requiring rectification as under in 2008 PTD 169:-
7. .......where an error of law or fact is discovered in the order itself, such an error falls within the category of error apparent on the face of record. The failure of the Court to take into consideration the material facts or statutory provisions which if so considered would have material effect on the fate of the case would also amount to an error on the face of record." [at pp.174-175 of the Report.]"
In view of the above-cited case-law, the learned A.R. concluded that mistakes pointed out in the instant Rectification Application are the "mistakes apparent from the record", hence, they are rectifiable under section 221 of the Income Tax Ordinance, 2001.
9. During the proceedings the learned A.R. was also confronted with the premise that if the exercise required by him under section 221(ibid) is undertaken, it would amount to reviewing the Order passed by us, and power of review is apparently not available to this forum under the Income Tax Ordinance, 2001.
The learned AR has rightly contended that by rectifying a mistake of law or fact, even if the total result of an original / appellate order is changed, it cannot be refused by saying that from the grounds taken up in the miscellaneous application it seems that it is more of a review rather than an application for rectification.
As the condition for exercising "rectification jurisdiction", and "review jurisdiction" is the same, rectification is allowed even if the whole of the order sought to be rectified is reviewed. "Review" is, thus, not prohibited under the Income Tax Ordinance, 2001, it is, rather, permissible by way of rectification. Mere title of "Rectification of mistakes" in Section 221(ibid) does not change the nature of power, when the wording of the Section 221(ibid) is akin to power of review under section 114, C.P.C. read with Rule I of Order XLVII, C.P.C.
Had it been intent of the law-maker to restrict the rectification ONLY to correct clerical or arithmetical mistakes in an order allowed by section 152, C.P.C., it would have been said so. The words used in Section 221(ibid) are: "to rectify any mistake apparent from the record.".
The words "any mistake" and "apparent from the record" enlarge the scope of power of rectification much beyond the power given to the Civil Courts under section 152, C.P.C. and make it analogous to the power of "review" given under Section 114, C.P.C. read with Order XLVII, C.P.C. by using the following words in Rule (1) of Order XLVII (ibid):- "on account of some mistake or error apparent on the face of the record".
The mistake sought to be rectified has not been restricted ONLY to the "Order", but it has been extended to the record of the case, on the basis of which the same was passed.
10. In view of the above discussion, we are of the considered view that the word "review" means re- examination of a "view" earlier expressed clearly by a Court or other forum of law. Where there has been no view expressed on certain vital issues going to the roots of a case, and having bearing on the final outcome of the case, directing adjudication of the un-determined issues under section 221 of the Income Tax Ordinance, 2001 cannot be said to be a "review". It is simple "rectification" of "mistake" of non-adjudication of vital issues having direct bearing on the fate of the case.
Even otherwise, the wording of section 221(ibid) reproduced (sic).
"221. Rectification of mistakes. -- (!) The Commissioner, the Commissioner (Appeals) or the Appellate Tribunal may, by an order in writing, amend any order passed by him to rectify any mistake apparent from the record on his or its own motion or any mistake brought to his or its notice by a taxpayer or, in the case of the Commissioner (Appeals) or the Appellate Tribunal, the Commissioner." is very much similar to the wording of Section Rule 1 of Order XLVII reproduced as under :- "1. Application for review of judgment. (1) Any person considering himself aggrieved -
(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred,
(b) by a decree or order from which no appeal is allowed, or
(c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of record or for any other sufficient reason, desires to obtain review of decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order.", which lends support to the learned AR's arguments that though Section 221 (ibid) is titled "Rectification of mistakes", yet "Title" of a Section cannot control the power given by express wording of a Section. If the wording allows "review", it cannot be said to be "prohibited" under the Income Tax Ordinance, 2001.
11. Having heard the rival arguments, and after careful perusal of record of this case, we have reached the conclusion that while passing the earlier order in ITA No. 3117/LB/2020, the following mistakes inadvertently crept in the impugned Order while upholding the findings of the learned CIR(A) on the legal grounds:-
(1) the learned CIR(A) had either ignored the binding precedents, or sat on judgment of the verdicts of the higher judicial fora in the following cases:-
(i) 2021 PTD (Trib) 1223;
(ii) 2002 PTD (Trib) 3107;
(iii) 2011 PTD (Trib) 321;
(iv) 2006 PTD (Trib) 673;
(v) 2006 PTD (Trib) 429;
(vi) 1997 PTD (Trib) 1994;
(vii) 2001 PTD 1633;
(viii) 2009 PTD (Trib) 1067;
(ix) 2013 PTD (Trib) 10;
(x) 2011 PTD 2435;
(xi) 1997 PTD 47;
(xii) 2009 PTD (Trib) 1963;
(xiii) 2009 PTD (Trib) 1919;
(xiv) 2004 PTD (Trib) 1784;
(xv) 2000 PTD (Trib) 2531;
(xvi) 1988 PTD (Trib) 117; and
(xvii) 2007 PTD (Trib) 2601; which he could not do in view of the following decisions of this Tribunal: -
(a) NTR 1996 Trib 144;
(b) 1996 PTD (Trib) 803;
(c) 1996 PTD (Trib) 197; and
(d) 2019 PTD (Trib) 2162.
It will be advantageous to reproduce the following excerpts out of NTR 1996 Trib 144:- "16 .......... except Cs.I.T.(A)/A.A.Cs. all other income-tax authorities may be party to the proceedings envisaged under the Income-Tax Ordinance, 1979, but the Cs.I.T.(A)/A.A.Cs. are never party to any income-tax proceedings and they perform judicial functions in the hierarchy of judicial authorities established under the Income-Tax Ordinance, 1979. Thus, any judgment by the Cs.I.T.(A)/A.A.Cs., Income Tax Appellate Tribunal or High Court is binding on the income-tax authorities discharging administrative functions and it deserves all respect from them but it is subject to their right of appeals/reference and till the judgment has attained finality the functionaries in the administrative hierarchy are allowed to act according to their point of view in order to keep the issue alive which is sub judice at any judicial forum. However, the status of Cs.I.T.(A)/A.A.Cs. is different. As we have already explained the Cs.I.T.(A)/A.A.Cs. are never party to the proceedings, therefore, as soon as any judgment is pronounced by the Income Tax Appellate Tribunal or High Court it becomes binding on the Cs.I.T.(A)/ A.A.Cs. being the subordinate judicial forum notwithstanding the pendency of issue in reference before the Hon'ble High Court or any appeal before the Hon'ble Supreme Court of Pakistan. From the perusal of impugned order of the learned Cs.I.T.(A) and particularly the order of Mr. Farooq Amin, it appears that there is some misgiving in the minds of these learned Cs.I.T.(A). While discharging their functions as Cs.I.T.(A) they still feel themselves bound by the orders/instructions of the C.B.R., in judicial matters as well and moreover they have not been able to detach themselves from the administrative hierarchy. Instead of demonstrating themselves as an independent and impartial judicial officers they have acted like a party to the proceedings in the same manner as an I.A.C. or C.I.T. in administrative hierarchy acts taking the orders / instructions of the C.B.R. as binding on them"' . [at pp. 155 and 156] "18. Before parting with this order we would like to state that we have been observing indiscipline on the part of Cs.I.T.(A) and on the part of assessing officer as well. Several instances have come to our notice wherein the subordinate officials have either side-tracked / avoided the judgments of the higher forum or have refused to follow them expressly. We took notice of such an incident in our order dated 5-8-1991 in ITA No. 951/HQ of 1990-91 and observed as follows : "The order of this Tribunal is binding on the subordinate income-tax authorities and, therefore, we deprecate the manner in which the Commissioner of Income-tax (Appeals) has side-tracked the order of this Tribunal. We disapprove such practice on the part of subordinate income-tax authorities and expect that in future the orders passed by this Tribunal shall be properly respected and followed.". [at p. 160] "20. It appears that no action was taken by the C.B.R. with the result that more instances of judicial misconduct and indiscipline have come to our notice. The impugned order of Mr. Farooq Amin, the learned C.I.T.(A) is not only an embodiment of the judicial indiscipline but it is contemptuous as well.". [at p. 161]
(2) Ground No. II as to the adoption of wrong base income at Rs.75,346,712 remained unadjudicated by us;
(3) we ought to have made our own adjudication of the issues raised before us in view of the hon'ble LHC's verdict in ITR No. 41041 of 2022, dated 22.09.2022, but we wrongly remained content with the findings of the learned CIR(A), which were against the binding precedents of this Tribunal, which materially caused prejudice to this Applicant's cause;
(4) case was wrongly remanded to the OIR, as no fresh probe into the facts of the case was required.
As all the material for concrete and final decision on the factual plane was already available on record right from the stage of amended assessment proceedings by the OIR, which he ignored contumaciously, the impugned remand was not warranted. This Tribunal could have conclusively determined all the legal and factual issues itself.
12. As a sequel to the above, the Order in ITA No. 3117/LB/2020, dated 08.09.2021 is re-called. The office is directed to fix the main appeal in this Bench in the next week for fresh hearing and disposal.