1. SADAQAT HUSSAIN RAJA, C.J. Through the captioned writ petition filed under Article 44 of the Azad Jammu and Kashmir Interim Constitution, 1974, whereby a prayer has been made by the petitioner.
2. It is therefore, most respectfully submitted that the Provincial Assessment Order for the Tax year 2010 (Annexure PA/01) communicated vide letter No. DCIR/C-10/6747/2015 dated 27.06.2015 (Annexure PA) passed by Deputy Commissioner Inland Revenue Circle-10 (Professional)
3. Muzaffarabad and Order No. CIR-189/3728-29/2016 dated 09.03.2016 (Annexure PC) passed by Commissioner Inland Revenue Azad Jammu and Kashmir, may kindly be declared illegal, coram non judice without lawful authority and it may kindly be declared that the respondents did not have an authority to assess the petitioner for Income Tax under the Provision of Income Tax Ordinance, 2001 as applicable in Azad Jammu and Kashmir. Any other relief admissible under law may also be granted.
4. Facts of the case are that Azad Jammu and Kashmir Technical Education and Vocational Training Authority (TEVTA) was established through an Act of the Assembly No. III of 2007. It is stated that in view of Section 3 ibid, the function assigned to. AJK TEVTA through Act III of 2007 are enumerated in Section 3. It is contended that the functions assigned to AJK TEVTA does not indulge in any business wherefrom any income is derived and AJK TEVTA neither sells or purchase any item which shall become the subject matter of income. It is further contended that the AJK TEVTA does receive any income as defined in Section 2(29) of Income Tax Ordinance, 2001 as adopted in Azad Jammu and Kashmir. It is submitted that the proviso appended to Section 3(2) of AJK TEVTA Act would show that even any immovable property acquired by AJK TEVTA shall not be sold without prior approval of the Government. It is further submitted that according to Section 3(4) of AJK TEVTA, the authority i.e. AJK TEVTA did not have the Board of Directors in similar manner which is the requirement of a Company incorporated under the Companies Ordinance as applicable in Azad Jammu and Kashmir and in this view of the matter the AJK TEVTA does not fall within the definition of a Company. It is alleged that the respondents served with a notice to AJK TEVTA under Section 176 of Income Tax Ordinance which was replied accordingly on 10.10.2014. The respondents served another notice under Section 176 of Income Tax Ordinance on 17.11.2014 which was replied. It is further alleged that the respondents served .another notice under Section 165 of Income Tax Ordinance dated 15.04.2015 which was also replied on 05.05.2015. The petitioner has prayed for setting aside the Provisional Assessment Order for the tax year 2010 passed by Deputy Commissioner Inland Revenue Circle 10 and Order dated 09.03.2016 'passed by Commissioner Inland Revenue Azad Jammu and Kashmir.
5. In earlier round of litigation, the writ petition was dismissed by this Court vide order dated 23.01.2019. The petitioner filed an appeal before Hon'ble Supreme Court and the Hon'ble Supreme Court of Azad Jammu and Kashmir while admitting the writ petition remanded the case for disposal on merits after hearing the parties in accordance with rules and law. Respondents have filed written statement wherein it is stated that the petitioner has no locus standi to file the extraordinary constitutional jurisdiction of High Court as he does not fall in the definition of aggrieved person. It is submitted that the writ petition is pre-mature and the petitioner has an alternate remedy but he failed to avail the same. It is further submitted that AJK TEVTA was established as corporate body through Assembly Act (III) of 2007 dated 17.02.2007. It is alleged that various notices were issued to the UK TEVTA but the petitioners failed to file return. It is alleged that against Provisional Assessm ent Order dated 27.06.2015 the appellant filed revision under Section 122-A of Income Tax Ordinance, 2001 before Commissioner Inland Revenue. The revision petition was dismissed by the Commissioner appeal. It is contended that revision lies against final Assessm ent Order whereas the appellant had filed revision against Provisional Assessment Order which was not competent. The respondents have prayed for dismissal of writ petition.
6. We have heard the learned counsel for the parties and gone through the record of case.
7. A perusal of record shows that the petitioner/Azad Jammu and Kashmir Technical Education and Vocational Training Authority (TEVTA) has filed the instant writ petition before this Court on 22.04.2016 against the Provisional Assessment Order for the tax year 2010 passed by Deputy Commissioner Inland Revenue Circle 10 (Professional) Muzaffarabad and order passed by Commissioner Inland Revenue Azad Jammu and Kashmir dated 09.03.2016. A Division Bench of this Court dismissed the writ petition in limine vide order dated 23.01.2019. The petitioner (TEVTA) filed an appeal before the Hon'ble Supreme Court. The Hon'ble Supreme Court has admitted the writ petition for regular hearing and remanded the case to this Court for disposal on merits after hearing the parties in accordance with rules any law.
8. The nucleus of the controversy for determination according to the judgment of the Apex Court is interpretation of Section 127 of Income Tax Ordinance, 2001 in the light of the facts of the case in hand. In order to resolve this controversy, we deem it proper to constitute the following points. i. Whether the impugned proceedings are according to law?
9. What is the Scope of Section 127 of Income Tax Ordinance, 2001?
10. The petitioner claims that the respondents did not serve any notice upon him under Section 114(4) of Income Tax Ordinance, 2001. To resolve this question we have to discuss the facts of case in light of relevant law. According to Section 114(4) of Income Tax Ordinance, 2001, the Commissioner may issue notice in writing, require any person who in the Commissioner's opinion is required to file a return of income failed to furnish a return of income for that year within 30 days from the date of service of notice as the Commissioner may allow. The relevant Section 114(4) is reproduced as under:
(4) Subject to subsection (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner's opinion, is required to file a return of income under this Section for a tax year [or assessm ent year] but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer [or shorter] period as may be specified in such notice or as the Commissioner may allow.
11. A perusal of aforesaid reproduced provision of law clearly reveals that the Commissioner may by notice in writing require any person who in Commissioner's opinion is required to file a return of income but who has failed to do the same may issue notice to him. A perusal of record shows that no notice upon the petitioner under Section 114(4) has been served. The learned counsel for the respondents was inquired about the notice under Section 114(4), he admitted that notice under Section 114(4) is not available on record.
12. The learned counsel for the petitioner argued that after issuance and service of notice under Sections 114(4), the proceedings under Section 122(C) may be initiated. We have perused the Section 122(C) of Income Tax Ordinance, 2001, a perusal of which reveals that Section 122(C) is omitted by the Finance Act, 2017, however, the instant writ petition was filed on 22.04.2016 and at that time Section 122(C) was in existence. It may be stated here that according to Section 122(C), a person fails to furnish return of income for any tax year, the Commissioner may make a provisional assessm ent of the taxable income. The relevant Section is reproduced as under: 122 C. Provisional Assessm ent:- (1) where in response to a notice under subsection (3) or subsection (4) of Section 114 a person fails to furnish return of income for any tax year, the Commissioner may, based on any available information or material and to the best of his judgment, make a provision assessm ent of the taxable income or income of the person and issue a provisional assessm ent order specifying the taxable income or income assed and the tax due thereon.
13. (2). Notwithstanding anything contained in this Ordinance, the provisional assessment order completed under subsection (1) shall be treated as the final assessment order after the expiry of [forty five] days from the date of service of order of provisional assessment and provision of this Ordinance shall apply accordingly.
14. A bare reading of above reproduced Section makes it crystal clear that before initiating proceedings under Section 122 of Income Tax Ordinance, 2001, proceedings for issuance of notice under Section 114(4) would have been initiated. A Provisional Assessment under Section 122(C) has to be made after issuance of notice under Section 114(4). The learned counsel for the respondents' was when confronted, he frankly conceded that the respondents did not issue notice under section 114(4), therefore, respondents failed to comply with the provision of law, hence, the proceedings are against the law.
15. The next point is what is the scope of Section 127 of Income Tax Ordinance, 2001? For convenient Section 127 of Income Tax Ordinance, 2001, is reproduced as under:
127. Appeals to Commissioner (Appeals): Any person dissatisfied with any order passed by a Commissioner or a [Office of Inland Revenue] under sections 121, 122, 143, 144, 162, 170, 182, or 205, or an order under subsection (I) of Section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of subsection (3) of Section 172, [declaring] a person to be the representative of a non-resident person for an order giving effect to any finding or directions in any order made under this Part by the Commissioner (Appeals) Appellate Tribunal High Court Or Supreme Court, or an order under Section 221 refusing to rectify the mistake, either in full or in party, as claimed by the taxpayer or an order having the effect of enhancing the assessm ent or reducing a refund or otherwise increasing the liability of the person except an assessment order under section 122(C) may prefer an appeal to the Commissioner (Appeals) against the order.
(2) No appeal under subsection (1) shall be made by a taxpayer against an order of assessment unless the taxpayer has paid:-
(a) The amount of tax due under subsection (1) of Section 137, and
(b) No appeal under subsection (1) shall be made by a taxpayer [against] an order of assessment unless the taxpayer has paid the amount of tax due under subsection (1) of Section 137.
16. (3).........................................................................................
17. (4)........................................................................................
18. (5)........................................................................................
19. Although, in Section 127 words "except an assessment order under section 122(C)" have been omitted, by the Finance Act, 2017, however, the writ petition was filed on 22.04.2016 prior omission of these words.
20. Chapter III of the Ordinance deals with appeal and Section 127 clearly ousts the jurisdiction of Appellate forum against any order passed under Section 122(C). Hence, there is no alternate, adequate, efficacious remedy except to invoke constitutional jurisdiction.
21. The net then of the above discussion is that the writ petition is accepted and whole proceedings conducted by the respondents are against the law and procedure therefore, the, Provisional Assessm ent Order for the tax year 2010 dated 27.06.2015 passed by Deputy Commissioner Inland Revenue Circle-10 (Professional) Muzaffarabad and order dated 09.03.2016 passed by Commissioner Inland Revenue are hereby set aside.