ZAHID SIKANDAR, JUDICIAL MEMBER. The taxpayer inter alia has assailed Order No.01 dated 05.02.2018 passed by CIR(A-III), Lahore whereby the CIR(A) annulled the rectification order dated 24.03.2017 with the direction to the OIR that FED be charged for the period confronted in the show- cause notice only i.e. for the period 01.07.2010 to 30.06.2011.
2. Brief facts of the case are that the assessment order No.3/2015 dated 19.01.2015 was framed by the assessing officer whereby FED of Rs.250,211,925/- (including penalty of Rs.12,143,425/-) was held recoverable from the taxpayer. Both the appeals filed by the taxpayer against said assessment order were disposed of against the taxpayer by the CIR(A-II) and the ATIR vide order No. A-II/15 dated 03.03.2015 and FEA No.3/LB/2015 dated 11.05.2015 respectively. The assessee further assailed the order of the ATIR before the Lahore High Court vide ETR No. 05 of 2015 whereby the Hon'ble court vide order dated 17.06.2015 conditionally suspended the impugned order subject to deposit of Rs.47(M) to the satisfaction of the concerned Commissioner. During the pendency of the reference application, the taxpayer filed an application for rectification before the assessing officer raising following grounds:- "The proceedings of the original order # 03/2015 was initiated with a show-cause # 88 dated 27- 08-2014 on the basis of information from Lahore Development Authority that the Central Park Housing Scheme Phase-I has developed upto 30-06-2011 on area measuring 2,380,685 sq yards.
The area of the scheme which was considered for charging the FED was on the information when was not correct, therefore, liable to be rectified on the basis of definite and accurate information which are verifiable from the Lahore Development Authority and such informant along with evidence are submitted as under:
1. The actual Area which was approved by (LDA) upto 30-06-2011 was measuring 948 Kanals (474,000 sq. yards) vide their Letter # DMP 495-S/725 dated 12-04-2007, photocopy of the letter is attached therewith for your kind verification and record."
3. The assessing officer after hearing the matter rectified the previous order in original in the following manner:- Sr. # Particular Amount 1 Approved and developed area upto 30.06.2011 (in kanals)948 2 Approved and developed area upto 30.06.2011 (in Sq. Yards)474.000 3 The rate of FED per Sq. Yar (in Rupees) 100 4 FED payable 47,400,000 5 Less already deposited (22,784,819)
02/25/2015 03/06/2015 03/13/2015 03/13/2015 03/18/2015FE20150225119661172649 FE2015030620271069559 FE20150313001135337 FE2015031303001135338 FE201518196611222391,000,000 1,000,000 1312770 18,472,049 1,000,000 6 Balance amount payable 24,615,181
4. Not satisfied with the rectification done by the assessing officer, the taxpayer filed appeal before the CIR(A) against order dated 24.03.2017 passed by the OIR in rectification application. The learned CIR(A) after hearing the appeal annulled the impugned order with the direction to the OIR to charge FED for the period confronted in the show-cause notice. Still discontented, the taxpayer has come up further this appeal before the ATIR against the orders passed by the learned authorities below.
5. Arguments heard.
6. At the very outset the learned AR was confronted as to how the rectification application was maintainable before the assessing officer when order-in-original was merged into the appellate orders, the learned AR persisted that mistake was apparent on the record that was partly rectified.
The learned AR emphasized that originally order was not passed in accordance with law hence rectification was filed which was partly done however the CIR(A) after completing oversighting the actual facts directed the OIR to charge FED for the period confronted in the show-cause notice. We are afraid that both the authorities have passed the orders in complete oblivion of law as once the appellate authority decides the appeal, the order of the lower authority merges into the appellate order. In the instant case not only the CIR(A) but the appellate Tribunal also finalized the appeal against order-in-original passed by the assessing officer and as per record and admission made by the learned AR reference application is pending before the Hon'ble Lahore High Court against order of the Tribunal.
7. After exercising original jurisdiction, the OIR becomes functuous officio with a little window of rectification and that too against a mistake apparent and floating on the surface of order. But after decision of the appellate forum the order-in-original merges into the order of the appellate authority and there remained no authority to the OIR to rectify his own order. The present case is a clear example of capriciousness on the part of taxation officer as despite the matter being decided by two appellate forums and being pending before the Hon'ble High Court in continuation of the assessm ent order, the OIR proceeded to rectify order-in-original. Further by doing this the OIR has changed the order-in-original against which reference is pending before the Hon'ble High Court. In other words, by rectifying original order the OIR has nullified all the proceedings/orders conducted/passed by the appellate forums. Such proceedings carried out by the officer should have been dealt with strictly by the CIR(A) which was not done rather the Commissioner (Appeals) after examining the merits once again annulled the order with certain directions to the OIR. The CIR(A) indirectly has contributed in the error that has been committed by the assessing officer in rectification proceedings. He completely oversighted this very fact that reference application is pending in continuation of the original proceeding against the order of the Tribunal and at that subsequent stage the OIR had no authority to rectify his order so any direction will amount to justifying the rectification made by the assessing officer. Needless to mention that the Hon'ble High Court suspended the assessm ent order subject to deposit of Rs.47(M) against charge of FED at Rs.250,2I1,925/- and the OIR in rectification re-calculated the FED payable at Rs.47,400,000/-. Both the officers below have certainly transgressed their jurisdiction by passing rectification orders in application and appeal. Orders passed by both the lower authorities in rectification proceedings are illegal, void ab-initio and not sustainable in the eye of law. This is a taxpayer's appeal against certain directions given by the CIR(A) to the assessing officer in rectification proceedings and the same is dismissed. It is declared that all proceedings carried out by the assessing officer and the CIR(A) in pursuant to rectification application were not in accordance with law and are hereby set aside.