ASIM HAFEEZ, J. This and connected reference applications, bearing ITRs No.225, 226, 227, 228 and 229 of 2015, raise common questions of law and are hereby decided, through this single decision.
2. Pertinently mentioned out that reference applications were previously decided by this Court vide order dated 12.11.2018 passed in ITR No.219/2015, in terms whereof matters were remanded to the Appellate Tribunal for determination of the proceedings, wherein revenue department has sought rectifica tion of its earlier order . Applicant dissatisfied, approached Honourable Supreme Court of Pakistan where Civil petitions were heard, and with concurrence of the parties allowed vide order dated 09.08.2019, and matter was remanded for decision afresh, after addressing the questions of law involved.
3. Matters relate to the Tax years from 2003 to 2008.
4. Reiterated, at the cost of repetition, that through these reference applications order dated 14.03.2012 of the Appellate Tribunal (original order) was not assailed but the subsequent order dated 29.06.2015 (rectified order), whereby Appellate Tribunal had allowed miscellaneous application(s), filed by the department, in exercise of rectification jurisdiction under section 221 of Income Tax Ordinance, 2001 ("Ordi nance 2001"). Maintainability of these reference applications, impugning the order passed on the miscellaneous applications, is not disputed in terms of ratio settled in the case of "Messrs HONG KONG CHINESE REST AURANT , MAIN BOULEV ARD GULBERG, LAHORE v. ASSIST ANT COMMISSIONER OF INCOME TAX, CIRCLE 6, LAHORE and another"
(2002 PTD 1878 ), on the principle of merger of rectified order with original order .
5. Following questions embody the legal issue and are common to all reference applications, which read as, "i) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal can lawfully revisit, review or recall its order under the garb of rectification in the terms of section 221 of the Income Tax Ordinance, 2001? ii) Whether on the facts and in the circumstances of the case, the learned Tribunal on the basis of judgments of the superior courts, which were subsequent in time, could lawfully rectify or recall its earlier order? iii) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal in view of the specific provision as contained in section 221 of the Income Tax Ordinance, 2001 is not bestowed with the jurisdiction to recall its earlier order in the garb of exercise of powers of rectification, which shall tantamount to reviewing of earlier order , in the light of law laid down by the Hon'ble Apex Court in cases reported as 2007 PTD 967, 1992 SCMR 687 , 2000 PTD 306 and 2003 SCMR 401? iv) Whether on the facts and in the circumstances of the case, the order dated 29th June, 2015 passed by the learned T ribunal on application by revenue is ab-initio void and illegal?
6. Before taking-up the submissions, it is expedient to reproduce texts of the original and rectified order , for facility of reference, Text of original Order of 14.03.2012 "Since we have declared the proceedings under Section 122 (5A) as void ab initio and order passed unlawful, there is no need to adjudicate the grounds on merit regarding the allowability of deprecia tion allowance. All the six orders passed under section 122(5A) are hereby declared null and void".
Text of rectified Order of 29.06.2015 "6. We have heard the argument of both the rival parties and perused the relevant record available on file. On the issue of dispute, the larger bench of the Appellate Tribunal Inland Revenue in the case of Prima Commercial Bank vs. Commissioner Income Tax consisting of 5 members has decided the issue by holding that after delegation of power by Commissioner to Additional Commissioner , the later is competent to pass the order under section 122(5A) of the Ordinance 2001. Subsequently , vide Misc. Application in the same case, seven members bench has once again held that Additional Commissioner is authorized to pass the order under the provision of section 122(5A). Similarly on the identical issue the higher courts of Karachi, Lahore, Peshawar have also held like manner of the larger bench consisting of five members and M. A. (Rectification) of Prime Commercial Bank Limited consisting of seven members bench at Lahore.
7. Similarly the Hon'ble Islamabad High Court has also accorded the similar treatment in the case of Mobile Communication (Pvt.) Ltd., in Civil Appeal filed by the taxpayer before the Hon'ble Apex Court of the country with the consent of both the parties has remanded back the case for the reason recorded as under: "Learned counsel for the petitioner agreed for disposal of the listed petitions if the observations are made, the petitioner shall file reply to the show cause notices before the Commissioner , Income Tax, raising all legal objections available to him and the legal objections shall be disposed of preferably before proceeding on merit and thereafter if need be merits of the case shall also be considered.
2. Petition are disposed of accordingly".
8. In view of the foregoing we are of the considered opinion that through the impugned order the Tribunal has committed a mistake by holding that Additional Commissioner was not competent to make such an order u/s 122(5A) of the Ordinance. The mistake is so apparent and obvious which is rectifiable under the provisions of section 221 of the Income Tax Ordinance, 2001. Therefore, doing so the order passed vide ITA Nos. 415 to 419 & 815/LB/2009 for the tax years 2003 to 2008 dated 14-03-2012 is recalled which will result the acceptance of Miscellaneous Applications on behalf of department."
[Emphasis supplied]
7. Brief facts are that Appellate Tribunal through original order , simplicitor , and without adverting to the merits of the appeal, annulled the amended assessment order by the Additional Commissioner , purportedly passed in exercise of powers under sub-section (5A) of section 122 of the Income Tax Ordinance, 2001 ('section 122(5A) of the Ordinance, 2001) on the premise that Additional Commissioner lacked jurisdiction to amend the deemed assessment order under section 122(5A) of the Ordinance, 2001. Original order was rectified upon miscellaneous application(s) filed by revenue department, by invoking powers extended under section 221 of the Ordinance, 2001. Appellate Tribunal allowed application(s) and rectified original order , declaring that earlier declaration of absence of jurisdiction of Additional Commissioner - to amend assessment in terms of order under section 122(5A) of the Ordinance, 2001 - was a mistake apparent from the record. Matters are adjudicated upon in this backdrop.
8. Indubitably , the central controversy regarding alleged exercise of jurisdiction by Additional Commissioner under section 122(1) of the Ordinance, 2001, read with section 122(5A), of the Ordinance, was dispositively a settled question of law - wherein constitutional courts of the country held that Additional Commissioner , in exercise of its delegated powers / authority , in terms of section 210 of the Ordinance, is competent to re-visit the deemed assessment and amend it under section 122(1)/122(5A) of the Ordinance. Appellate Tribunal rectified its original order by placing reliance on the judicial precedents - also referring to a decision of the larger Bench of the Appellate Tribunal.
Controversy , in the context of the facts narrated and judicial pronouncements, calls for interpretation of the scope, extent, and limits of rectification jurisdiction, envisaged under section 221 of Ordinance, 2001, which provision of law is reproduced hereunder for convenience, "Section 221. Rectification of mistakes. -- (1) 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 T ribunal, the Commissioner .
[(1A) The Commissioner may, by an order in writing, amend any order passed unde r the repealed Ordinance by the Deputy Commissioner , or an Income Tax Panel, as defined in section 2 of the repealed Ordinance to rectify any mistake apparent from the record on his own motion or any mistake brought to his notice by a taxpayer and the provisions of sub-section (2), sub-section (3) and sub-section (4) shall apply in like manner as these apply to an order under sub-section (1).]
(2) No order under sub-section (1) which has the effect of increasing an assessment, reducing a refund or otherwise applying adversely to the taxpayer shall be made unless the taxpayer has been given a reasonable opportunity of being heard.
(3) Where a mistake apparent on the record is brought to the notice of the Commissioner [or] Commissioner (Appeals) [ ], as the case may be, and no order has been made under sub-section (1) before the expiration of the financial year next following the date on which the mistake was brought to their notice, the mistake shall be treated as rectified and all the provisions of this Ordinance shall have effect accordingly .
(4) No order under sub-section (1) may be made after five years from the date of the order sought to be rectified."
9. Submissions narrated ; Primary contention of the counsels for the applicant is that Appellate Tribunal exceeded its jurisdiction in the guise of section 221 of Ordinance 2001, which jurisdiction cannot be stretched to review the original order , that too upon application of mind. Learned counsels further submit that original order of the Tribunal cannot be annulled / modified on the pretext of a subsequent decision of the constitutional courts, when said decisions were not available, at the time of passing of original order , hence, no question of any mistake apparent from the record, in the first place, arose. Further submits that rectification jurisdiction cannot be equated with or treated as substitute for the jurisdiction, conferred upon this Court through filing of reference applications for the determination of questions of law. Adds that original order , as evident from its nature, could be assailed by resorting to remedy of filing reference application, provided under section 133 of the Ordinance, 2001. Learned counsels stated that rectification jurisdiction cannot be invoked to upset the finality attained by the original order , which can only be challenged by filing of reference application, within the limitation prescribed . And limitation in this case had lapsed before the filing of applications. Adds that Tribunal, after passing of original order , became functus officio, which lacked powers to re-visit its original order , once passed and remedy of reference was not availed. Submits that there was no mistake apparent from the record, and Appellate Tribunal erred in law while assuming and exercising powers under section 221 of the Ordinance, which otherwise acted illega lly by giving retrospective effect to the decisionson the subject matter controversy - jurisdiction of the Additional Commissioner to amend the assessment(s). Learned counsel placed reliance on decisions in the cases of "COMMISSIONER OF INCOME TAX, PESHA WAR v. Messrs GUL COO KING OIL AND VEGET ABLE GHEE (PVT.) LTD. and 6 others" (2008 PTD 169), "COMMISSIONER OF INCOME TAX and another v. Messrs PAKIST AN PETROLEUM LTD. and 2 others" (2012 PTD 501), "PAKIST AN TOBBACO COMP ANY LTD., ISLAMBAD v. ADDITIONAL COMMISSIONER (UNIT -II), TAXATION OFFICER, LARGE TAX PAYERS UNIT , ISLAMABAD" (2013 PTD 747), "COMMISSIONER OF INCOME TAX, KARACHI v. ABDUL GHANI" (2007 PTD 967), "COMMISSIIONER OF INCOME TAX, KARACHI v. Messrs SHADMAN COTT ON MILLS LTD., KARACHI through Director" (2008 SCMR 204), "ISLAMUDDIN AND 3 others v. THE INCOME-T AX OFFICER and 4 others" (2000 PTD 306), "COMMISSIIONER OF INCOME TAX/ WEAL TH TAX, MUL TAN v. Messrs MOVE (PVT .) LTD., MUL TAN" (2013 PTD 2040 ), "THE COMMISSIONER INLAND REVENUE, LTU, LAHORE v. KOHNOOR ENERGY LTD., LAHORE" (2019 PTD (Trib.) 1953 ), "Messrs NISHA T TALKIES, KARACHI V. THE INCOME TAX OFFICER etc."
(1989 PTD 513), "INCOME TAX OFFICER, CENTRAL CIRCLE II, KARACHI AND ANOTHER v. CEMENT AGENCIES LTD." (PLD 1969 SC 322), "COMMISSIONER OF INCOME TAX v. Messrs BASHIR JAMIL & BROTHERS LTD." (2002 PTD 557), "COMMISSIONER INLAND REVENUE (ZONE-III), L.T.LU., ISLAMABAD v.
Messrs OIL AND GAS DEVELOPMENT CO. LTD." (2016 PTD 2727 ), "W.P. No.177 OF 2008 M/s NISHA T CHUNIAN LTD. v. PROVINCE OF PUNJ AB, ETC.", "FAWAD AHMED v. ELEC TION APPELLA TE TRIBUNAL, RAWALPINDI and others" (PLD 2018 Lahore 742) and "COMMISSIONER OF INCOME-T AX COMP ANY'S II, KARACHI v . Messrs NA TIONAL FOOD LABORA TORIES" ( 1992 SCMR 687 ),
10. Conversely , learned counsel for the department submits that the order passed by the Appellate Tribunal squarely falls within the ambit of jurisdiction extended under section 221 of Ordinance 2001, who relied upon the ratio settled in the case of "Pak Arab Refinery Limited v. Commissioner of Income Tax / Wealth Tax (Appeals), Zone-I, Lahore" (PTR No.545 of 2006).
11. In rebuttal, learned counsel for the applicant submits that the case referred is though distinguishable on facts still the ratio settled therein supports applicant' s case and the original order is not rectifiable in purported exercise of rectification jurisdiction.
Determination by the Court.
12. Before dilating upon the question of retrospective or prospective application of the judgments of the jurisdictional / constitutional courts - settling the issue of jurisdiction of the Additional Commissioner to amend assessment under section 122(1)/122(5A) of the Ordinance, 2001 - we consider it appropriate to highlight some critical facts in the context of relevant timelines. The question of legality of the jurisdiction exercised by the Additional Commissioner was not the case of first impression before the Appellate Tribunal, when original order dated 14.03.2012 was passed. Appellate Tribunal had earlier encountered similar question and decided it vide decision in ITA No.735/IB of 2010 vide order dated 09th August 2010 - reported as 2010 PTD (Trib.) 2254 . And even before said order of the Appellate Tribunal, Hon'ble Islamabad High Court had settled controversy vide judgment in the case of "PAKIST AN MOBILE COMMUNICA TION LTD. v. COMMISISONER OF INCOM E TAX AUDIT DIVISION and 5 others" (2010 PTD 1506 ), passed in exercise of constitutional jurisdiction, decided on 16.07.2009. And thereafter subject matter controversy - assumption and exercise of jurisdiction by Additional Commissioner - was numerously affirmed through variously passed decisions by the constitutional courts, including decision by the Apex Court while deciding Civil Appeals bearing No.1664-1665 of 2009 vide order of 11.09.2009 .
Series of judgments were passed on this issue, which need not to be recapitulated. Hence, the submission that decisions settling issue of jurisdiction of the Additional Commissioner were made after the passing of original order is misconceived. Now we take up the issue of the scope and extent of the rectification jurisdiction.
13. Section 221 of the Ordinance, 2001 is successor to section 156 of erstwhil e Income Tax Ordinance, 1979 (Ordinance, 1979). Hundreds of judgments are reported in law journals, periodical digests, and otherwise accessible through online search engines, whereby section 221 of the Ordinance, 2001, section 156 of Ordinance, 1979 and section 35 of erstwhile Income Tax Act 1922, were invariably interpreted. There is no cavil that broader principles for exercise of rectification jurisdiction are settled, which defined princi ples are followed, invoked, and applied in the context of facts of each case. To bring broader the principles into sharper focus, reference is made to the ratio settled in the case of "COMMISSIONER OF INCOME-T AX COMP ANY'S II, KARACHI v. Messrs NATIONAL FOOD LABORA TORIES" ( 1992 SCMR 687 ) and relevant portion whereof is reproduced hereunder , "Section 35 of the repealed Income-tax Act, 1922, hereinafter referred to as 'The Act' confers a power to rectify any mistake in the order which is apparent from the record. Such power can be exercis ed Suo Motu or if it is brought to the notice by any assessee. Therefore, essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence. The mistake should be so obvious that on mere reading the order it may immediately strike on the face of it. Where an officer exercising power under section 35 enters into the controversy , investigates into the matter , reassesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms an opinion different from the order , then it will not amount to 'rectification' of the order . Any mistake which is not patent and obvious on the record, cannot be termed to be an order which can be corrected by exercising power under section 35. In this regard reference can be made to Shaikh Muhammad Iftikharul Haq v. Income-tax Officer, Bahawalpur , PLD 1966 SC 524) and Pakistan River Steamer Limited v. Commissioner of Income-tax, 1971 PTD 204. In the present case the mistake pointed out by the petitioner was not of a nature to attract section 35 and, therefore, the High Court has correctly answered the first question in the negative".
14. We are called upon to interpret section 221 of the Ordinance in the context of specific question, that whether recalling of original order , on the premise of non-consideration of a decision of the jurisdictional court(s), relating to the exercise of jurisdiction of Additional Commissioner , can be construed as 'mistake apparent from the record'. We will also deal with the ancillary objections that whether Appellate Tribunal, upon passing of original order , became infructuous and whether finality , attributed to the original order , cannot be disturbed in the guise of rectification jurisdiction. It is apparent that similar issue came up for adjudication before the Supreme Court of India in the case of "Assistant Commissioner , Income Tax, Rajkot v. Saurashtra Kutch Stock Exchange Ltd." ([2008]305 ITR 227(SC) = (2008)14 SCC 171), relevant portion whereof is reproduced,
41. A similar question came up for consideration before the High Court of Gujrat in Suhrid Geigy Limited v.
Commissioner of Surtax, Gujarat MANU/GJ/0074/1998 : [1999]237ITR834 (Guj). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be "mistake apparent from the record" under Section 254(2) of the Act and could be corrected by the Tribunal.
42. In our judgment, it is also well - settled that a judicial decision acts retrospectively . According to Blackstonian theory , it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively . To put it differently , even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.
43. Salmond in his well-known work states; The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime.
44. It is no doubt true that after a historic decision in Golak Nath v. Union of India MANU/SC/0029/1967; [1967]2SCR762 , this Court has accepted the doctrine of 'prospective overruling'. It is based on the philosophy: The past cannot always be erased by a new judicial declaration/ It may , however , be stated that this is an exception to the general rule of the doctrine of precedent.
45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality .
46. In S. Nagraj and Ors.l v . State of Karnataka MANU/SC/0797/1993 (1994) ILLJ851SC, Sahai, J. Stated; Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mista ke is as valid reason to recall an order . Difference lies in the nature of mistake and scope of rectification, depend ing on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court.
In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order .
47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under Sub-section (2) of Section 254 of the Act and in rectifying "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order . Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for .
[Emphasis Supplied]
15. In another case of "M.K. Venkatachalam, I.T.O. and another v. Bombay Dyeing and Mfg. Co. Ltd." (AIR 1958 SC 875), involving construction of section 35 of the Income Tax Act 1922, the effect of amendment in law, retrospectively , was considered by Supreme Court of India in the context of scope of order of rectification, regarding completed assessment, wher ein order of the Bombay High Court was set-aside and exercise of rectification jurisdiction was upheld. It is appropriate to highlight relevant findings recorded in said case, which read as,
6. "It is in the light of this position that the extent of the Income-tax Officer's power under section 35 to rectify mistakes apparent from the record must be determined; and in doing so, the scope and effect of the expression "mistake apparent from the record" has to be ascertained. At the time when the Income-tax Officer applied his mind to the question of rectifying the alleg ed mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952 .
If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act. If, as a result of the said fiction we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisio ns of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income-ta x Officer was justified in the present case in exercising his power under section 35 and rectifying the said mistakes.".
[Emphasis Supplied]
16. Facts in the case of "Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi" ([2007]295 ITR 466(SC) = (2007 12 SCC 596), were that the Tribunal rectified its previous order on the ground that judgment of the co-ordinate bench escaped its attention, which order of rectification was set-aside by the High Court of Delhi.
And the Supreme Court of India set-aside the judgment of High Court of Delhi and upheld decision of the Tribunal.
Relevant portion whereof is reproduced for convenience, "12. As stated above, in this case we are concerned with the application under Section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in Section 154. It also finds place in Section 254(2). The purpose behind enactment of Section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its Order dated 10-9-2003 allowing the Rectification Application has given a finding that Samtel Color Ltd.'s case (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the questio n of admissibility/allow ability of the claim of the assessee for enhanced depreciation under Section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record.
13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by Section 254(2) of the Income Tax Act, 1961. When prejudice results from an order attributable to the Tribunals mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concep t of inherent power to review . In the present case, the Tribunal was justified in exercising its powers under Section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate Bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material, which was already on record.
The Tribunal has acknowledged its mistake; it has accordingly rectified its order . In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power . We are Simply proceeding on the basis that if prejudice had resulted to the party , which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case".
[Emphasis Supplied]
17. In another case of "Haryana State Co-Operative Supply and Marketing Federation Ltd. v. Commissioner of Income Tax" [2016]389 ITR 266(P&H) retrospective amendment in law was made basis of rectification in exercise of powers under section 254(2) of Income Tax Act 1961, relevant part is reproduced hereunder as, "6. Further , the Full Bench of this court in CIT v. Smt. Aruna Luthra MANU/PH/1928/2001 : [2001] 252 ITR 76 (P & H) [FB] was considering the scope of power given under section 154 which is analogous to section 254 of the Act for rectification of any mistake apparent on the record. It was held as under (page 79): "The power given to the authority is wide. It can correct 'any mistake' provided it is 'apparent from the record'. The first question that arises for consideration is-when a mistake can be said to be apparent from the record?
The plain language of the provision suggests that the mistake should be apparent. It must be patent. It must appear ex facie from the record. It must not be a mere possible view . The issue should not be debatable.
Mr. Sawhney contended that when the view taken by an authority is ex facie contrary to the decision of the jurisdictional High Court or a superior court, the case would fall within the mischief of section 154. However , Mr. Bansal submitted that while deciding a matter , an authority cannot anticipate the view that may be taken by the High Court or the Supreme Court on a subsequent date. If at the time of the passing of the order , the authority takes a particular view, which is not contrary to the existing interpretation of law, the provision of section 154 cannot be invoked.
Apparently , the argument of Mr. Bansal appears to be attractive. If the issue of error in the order is to be examined only with reference to the date on which it was passed, it may be possible to legitimately contend that it was legal on the date on which it was passed. The subsequent decision has only rendered it erroneous or illegal. However , there was no error much less an apparen t error on the date of its passing. Thus, the provision of section 154 is not applicable. However , such a view shall be possible only if the provision were to provide that the error has to be seen in the order with reference to the date on which it was passed. Such words are not there in the statute.
Resultantly , such a restriction cannot be introduced by the court. Thus, the contention raised by counsel for the assessee cannot be accepted.
There is another aspect of the matter . In a given case, on an interpretation of a provision, an authority can take a view in favour of one of the parties. Subsequent to the order , the jurisdictional High Court or their Lordships of the Supreme Court interpret the same provision and take a contrary view. The apparent effect of the judgment interpreting the provision is that the view taken by the authority is rendered erron eous. It is not in conformity with the provision of the statute. Thus, there is a mistake. Should it still be perpetuated? If the contention raised on behalf of the assessee were accepted, the result would be that even though the order of the authority is contrary to the law declared by the highest court in the State or the country , still the mistake could not be rectified for the reason that the decision is subsequent to the date of the order .
Only the dead make no mistake. Exemption from error is not the privilege of mortals. It would be a folly not to correct it. Section 154 appears to have been enacted to enable the authority to rectify the mistake. The legislative intent is not to allow it to continue. This purpose has to be promoted. The Legislature's will has to be carried out. By placing a narrow construction, the object of the legislation shall be defeated. Such a consequence should not be countenanced".
[Emphasis Supplied]
18. In the light of observations in above-noted decisions, the submissions that Appellate Tribunal became infructuous , and immunity claimed behind the principle of finality of the orders are misconceived. Learned counsels for the applicant undermined the effect and significance of period if limitation provided for exercising of rectification jurisdiction. Original order was rectified within the period of limitation provided under sub-section (4) of section 221 of the Ordinance, 2001. It is not the case of the applicant that rectified order was passed after lapse of limitation provided under sub-section (4) of sectio n 221 of the Ordinance, 2001. We concur that power / jurisdiction of rectification and review jurisdiction are not synonymous. Jurisdiction to review orders is not provided under Ordinance, 2001. Learned counsels misconstrued rectified order , which is not a review of the original order but mere rectification, to rectify misstate apparent from the record - where Appellate Tribunal failed to consider / appreciate judicial pronouncements settling the controversy . It is absurd to assum e that rectified order passed by the Appellate Tribunal required any debatable determination regarding controversy , confined to jurisdictional question already settled by constitutional courts. Appellate Tribunal had not reconsidered the matter but implemented the law, elucidated by the jurisdictional / constitutional courts. Rectified order removed apparent mistake simplicitor upon implementation / application of decision by the constitutional courts, followed by the Appellate Tribunal in some other cases, involving similar issue. Rectified order cannot, by any stretch of imagination, be termed as review . It is a misconception to assume that power of rectification is merely confined to rectification of arithmetical or typographical mistakes, which in fact and law extends to the rectification of mistakes of fact and law , provided such "mistakes are apparent from the record".
19. Another misconceived objection is that decisions of constitutional courts, whereby question of jurisdiction of Additional Commissioner was interpreted and settled, in the context of section 122(5A) of the Ordinance, 2001, cannot be applied retrospectively , on the principle that since earlier order of the Appellate Tribunal had attained finality . In this case decisions by constitutional courts were available when original order dated 14.03.2012 was passed. Reference to the cases of 'Pakistan Medical and Dental Council v. Muhammad Fahad Malik, (2018 SCMR 1956 ) and Messrs Mustafa Impex, Karac hi v. The Government of Pakistan through Secretary Finance, Islamabad & others (PLD 2016 Supreme Court 808) are not relevant for the purposes of present controversy . Guidance in the context of applicability of the decisions, retrospectively or prospectively , is sought from the decision by the august Supreme Court of Pakistan in the case of "Mir MUHAMMAD KHAN and 2 others v.
HAIDER and others" (PLD 2020 Supreme Court 233) relevant portion therefrom is reproduced hereunder ,
20. Now we proceed to examine the question of retrospectivity and applicability of the judgment of this Court in Mian Pir Muhammad (Supra) to the present cases. It is pertinent to mention here that the general rule in common law is that judicial pronouncements, with respect to most civil cases, apply retrospectively to cases pending before the courts and prospectively to any cases that are filed after the judgment has been rendered . Courts in various common law jurisdictions have applied this rule extensively . In Henry Harper v. Virginia Department of Taxation (1993) (500 US 86), Supreme Court of the United States of America held that: "When this Court applied a rule of feder al law to the parties before it that rule is the controlling interpretation of federal law and must be given full retroa ctive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate the announcement of the rule."
While obvious exceptions to this rule must, and do, exist in the context of crimina l cases and those cases where the Supreme Court has chosen not to apply its decisions retrospectively . If the Supreme Court does not explicitly mention that a judgment will not apply to cases still awaiting a decision before the courts, e.g. to protect vested rights, etc., the interpretation of the law declared by the Supreme Court will apply to them.
21. It is settled law that when the Supreme Court interprets or declares the law, that interpretation only clarifies the meaning of the words already used by the legislature or the competent authority drafting the provisions. It stands to reason, therefore, that the same interpretation must be applicable not from the time when the judgment pronouncing such interpretation was rendered but from the time when the law or provision in question was enacted.
This Court, in its judgment in Malik Asad Ali v. Federation of Pakistan through Secretary Law, Justice and Parliament Affairs, Islamabad ( PLD 1998 SC 161 ) has also held that: "The principle that the change in the state of law as a result of interpretation by this Court is to be given effect to from the date the Court interpreted the law is also not applicable in those cases which could be brought under challenge in accordance with the law before or after the interpretation of the provision by this Court. Even otherwise, as pointed out by us earlier , this Court while adopting an interpretation of the provision of the law or the Constitution which is at variance from the existing view, it is only declaring the correct law as an apex Court. By doing so, it neither legislates any new law nor amends the existing law. Therefore, while interpreting a provision of law or the Constitution, this Court can also provide the date from which the interpretation given by it is to come into effect, keeping in view the nature of the provision it is interpreting, the likelihood of possible prejudice which may be caused to an individual or a body of individual and the requirement of justice in the case,"
It is a matter of fact that all judgments of the Supreme Court where any law or provision has been interpreted only declare what the law is and do not make or amend any laws. Therefore, we agree with the view taken by this Court in Malik Asad Ali (Supra) and hold that such interpretations must apply to any cases that are brought before the courts under the law in question. It is, of course, within the purview of the Supreme Court to limit this application by prescribing a time from which such interpretations must apply , but this must be done according to the circumstances of specific cases and by balancing the detriments of such application with the existing laws in place".
[Emphasis Supplied]
20. Reference is also made to the decision in the case of "ABBASI ENTERPRISES UNILEVER DISTRIBUT OR, HARIPUR and another v. COLLECT OR OF SALES TAX AND FEDERAL EXCISE, PESHA WAR and others"
(2020 PTD 147 ), relevant portion whereof is reproduced hereunder , "We may note that learned counsel for the Department had also sought to argue that the order of extension was made on 24.09.2010 whereas the judgment in Super Asia was given on 31.03.2017 and therefore anything said therein ought not to apply to the former . With respect, we are quite unable to agree. The law declared by this Court as to the proper interpretation and application of the first proviso to subsection (3) applied fully to the order of extension under consideration".
21. In the instant case, jurisdictional courts (High Courts and Supreme Court of Pakistan) have decided the issue of jurisdiction of Additional Commissioner , in the wake of delegation of authority by the Commissioner , under section 122(5A) of the Ordinance, which order escaped attention of the Appellate Tribunal when original order was passed.
22. Exercise of rectification jurisdiction by the Tribunal is valid, in accordance with the law and within the scope of "mistake apparent from the record". We have examined the decision in the case of 'Pak Arab Refinery Ltd.' (supra) and find the ratio therein is not conve rse to the conclusion reached hereunder . In view of the facts and circumstances, Appellate Tribunal is justified to allow applications, upon identifying the mistake apparent from the record, in wake of existing judicial pronouncements by constitutional courts where issue of jurisdiction was decided conclusively . The judgments referred by the counsels for the applicants elucidate scope and extent of rectification jurisdiction in the context of the facts of each case, which are not attracted to the facts and circumstances of the lis at hand.
23. Questions are answered in favour of department and against the application taxpayer , and reference applications are dismissed.
24. Office shall send a copy of this judgment under seal of the Court to the learned Appellate Tribunal, Inland Revenue as per Section 133(5) of the Income Tax Ordinance, 2001.