1. SALEEM AKHTAR, J.---The petitioner was originally incorporated under the name and style of Pak Autos Ltd. Thereafter, it came to be known as Haroon Industries Ltd., a private limited company in respect of which a certificate was issued by the Registrar Joint Stock Companies, Karachi. On 29-11- 1973 it was nationalised under the Economic Reform Order 1972 and its name was changed to Republic Motors Ltd. By an order passed in exercise of the powers conferred by Article 7-B (1)(a)(i) of the Economic Reform Order 1972 the Federal Government acquired the whole of the shares from all the shareholders of the Republic Motors. By an order dated 12-7-1974 the management of the Republic Motors Limited and the shares or proprietary interest acquired by the Federal Government were transferred to PACO. To the petitioner the PACO is wholly and so owned by the Federal Government for all practical purposes and thus the petitioner is a corporation owned by the Government. The Income Tax assessment of the petitioner from the date of nationalisation upto the year 1985--86 were framed treating it a company owned by the Government. The rate of Income-tax and Super-tax charged from "public company" as provided by Income Tax Act 1922 and Income Tax Ordinance 1979 were applied. After the promulgation of the Companies Ordinance 1984 it became obligatory on the petitioner to print the word "private" with its name. On 9th March, 1987 respondent No. 1 issued a letter in which it was stated that as majority shares of the petitioner are held by PACO which is not the Federal Government, the petitioner company has wrongly been taxed as public limited company and therefore he intended to rectify the assessment for the assessm ent years 1979-80 to 1985-86 under section 156 of the Income Tax Ordinance, 1979. It may be mentioned that if the petitioner were to be treated as private limited company it had to pay 5% more tax than was assessed. The petitioner replied the notice repudiating the claim and it was further stated that the assessm ent for the years 1978-79, 1979-80 and 1981-82 could not be brought within the pale of section 156 of the Income Tax Ordinance and such action was barred by time. In regard to 1982-83 to 1985-86 it was stated that due to certain addition appeals were filed before the Commissioner of Income Tax (Appeals) who by decision dated 19-10--1985 has set aside the assessm ents therefore, these assessments require de novo proceedings and were beyond the scope of section 156. Respondent No. 1 withdrew the action initiated under section 156 and expressed his intention to reopen the case under section 65 of the income Tax Ordinance and finalise the assessm ent by enhancing tax rate to 55%. Respondent No. 1 by letter dated 19-3--1987 stated that he intended to reopen the assessment under section 65 of the Income Tax Ordinance and the petitioner was required to file objections or explanations alongwith necessary evidence within a week of the receipt of the letter. The petitioner wrote a detailed letter to the Chairman, Central Board of Revenue and copy was endorsed to respondent No. 1. This letter was forwarded by C.B.R. To the Regional Commissioner. Thereafter, the petitioner sent several letters to the Regional Commissioner and the CBR but no reply seems to have been received. On 21-5-1987 the petitioner, received a demand notice from respondent No. 1 and orders passed under section 65 of the Income Tax Ordinance in respect of assessment years 1979-80, 1981-82, 1982-83 and 1985-86. The petitioner filed appeals against these orders on 18-6-1989. During the pendency of these appeals the petitioner filed this Constitution petition on 9-7--1987. The appeals filed by the petitioner were dismissed and copy of order were received on 14-7-1977. The matter proceeded m this Court when the petitioner filed an application for amendment of the petition impleading the Commissioner of Income Tax (Appeals) as respondent No. 2 and also challenging the order passed in appeal.
2. Amendment was, however, allowed subject to all just exceptions.
3. Mr. Javed Siddiqui the learned counsel for the petitioner has contended that respondent No. 1 had no jurisdiction to open the case under section 65 of the income Tax Ordinance. According to the learned counsel the petitioner was treated from 1974 onwards as a public limited company and there being no change in the structure of the constitution of the company, by mere change of opinion section 65 could not be invoked.
4. It is not disputed that from 1974 onwards the petitioner was treated a public limited company and on that basis assessm ents were made. It was only on 9-3-1987 when for the first time respondent No. 1 issued notice under section 156 for rectifying the orders for assessment years 1979-80 to 1982- 83 and 1985-86 on the ground that the petitioner is a private limited company. However, on objection being raised that such action is barred by time respondent No. 1 changed his course of action and issued notice dated 1.9-3-1987 for reopening the case under section 65. It reads as follows:-- "SUBJECT. Proceedings for the Assessm ent Years 1979-80. 1980-81. 1981-82 1982-83 and 1985-86.
5. Please refer to this office letter dated 9-3-1987 wherein it was stated that during the assessment years noted above, the tax rate as applicable to the public limited Companies have been applied in your case. Whereas 50% shares in your case are held by M/s. Pakistan Automobile Corporation Limited which is not Federal Government. In the light of your counsel's letter No. RPM/I.T./522/493 dated 15-3-1987 certain objections regarding dates of assessment were raised. It is therefore, pointed out that assessm ents and revised assessments have been completed in this case for the assessm ent years noted above as under:- 1979-80 Original order under section 62 dated 18-10-1980. Rectified order under section 156 dated 30-4- 1985.
6. 1980-81 Original order under section 62 dated 7-9-1981. Rectified order under section 156 dated 30-4-1985.
7. 1981-82 Original order under section 59(1) dated 23-5-1982. Rectified/revised order under section 156 dated 30-7-1985.
8. 1982-83 Original order under section 59(1) dated 30-4-1983. Rectified order under section 156 dated 30-4- 1985.
9. 1985-86 Original order under section 62 (Detailed Scrutiny) dated 21-6--1986.
10. According to the dates of completion of revised assessment as well as rectified assessment, the case has been become time-barred. However, if your contention may be taken as correct regarding date of assessm ent the original facts regarding applicability of tax rate applied in your case still need rectification reopening for the purpose of proposed taxation in the interest of revenue. I therefore, intend to reopen the assessment under section 65 of the Income Tax Ordinance, 1979. You are required to file your view point/objection/explanation alongwith necessary evidence within a week of the receipt of this letter.
11. (SHAUKAT SOOMRO), Income Tax Officer Companies Circle B-3 KYC"
12. After issuing notice the following order was passed:- "Order under section 65 of the Income Tax Ordinance, 1979: The perusal of assessments record reveals that the rate as applicable to the Public Limited Companies was applied in this case for the assessm ent year under consideration, although the majority of shares were not held by the Government but were held by M/s. Pakistan Automobiles Corporation Limited, which is not the Federal Government. The mistake was apparent from the record, because the assessment was completed by applying tax rate of Public Limited Company which was too low a rate' as compared to Private Limited Company which requires to be rectified re-open under section 65. A show cause notice under section 156 was issued on 9-3-1987 duly served an assessee on 12-3-1987 for compliance by 16-3-1987. In compliance to which assessee filed a letter No. 493 dated 15-3-1987 and a letter No. 500 dt. 18-3-1987 objecting that the cases have become time-barred thus cannot be rectified under section 156.
13. Another opportunity vide this office letter No. 548 dated 19-3-1987 was provided wherein it was reflected that none of the cases was time-barred for the purpose of rectification under section 156 and a complete date was provided to the assessee. As a gesture of good-will the request of assessee regarding non-rectification under section 156 was taken into consideration but show- cause for re-opening the same assessment under section 65 was issued for compliance within a week. The same was served on 21-3-1987. In compliance to which assessee filed letter No. Dated 28--3-1987 which was seen, examined and is found devoid of any merit. After necessary permission regarding re-opening of the case under section 65 from the inspecting Assistant Commissioner of Income Tax Companies Range 1 Central Zone `B' Karachi, notice under section 65 indicating the case has been assessed at too low a rate was issued on 15-4-1987 for compliance by 5-4-1987 requested for adjournment which was allowed accordingly. In compliance to notice under section 65 the A.R. Of assessee M/s. Javaid Law Associates filed letter No. 389 dated 2-5-1987 stating that they do not file revised return and the original return may be considered as sufficient.
14. Notice under section 61 alongwith a letter dated 5-5-1987. In compliance to which A.R. Of assessee did not attend the office/case but filed their explanation vide their letter No. 404 dated 12--5-1987.
15. The explanation filed has been considered and is found devoid of any merit. It is an admitted position that the shares are not held by the Government but by a corporation. The definition of public Limited Company in Part IV under para `B' of First Schedule is very clear, unambiguous and does not involve any complex phenomenon of interpretation. There is no question of lifting a veil of incorporation of definition of company whether Private or Public is very clear, not only in the Companies Ordinance but also in Income Tax Ordinance, 1979. The case discussed/finalised in the light of explanation extended by the applicable to the Private Limited Company."
16. The appeal filed against this order was dismissed with the following observations: "After scrutiny of the records and discussion of the case and with all due respects to the common arguments given for 1979-80, 1980-81 and 1981--82. I find that with all due respects to the references made to the letter of Ministry of Production and the instructions of the C.B.R. Vide office memorandum by No. 5010-M-(IT)/80, dated 23rd August, 1980, the I.T.O. Was justified in passing the order under the provisions of sections 65.
17. Regarding the issue dealing with rate of super tax which was applied in the revised order under Section 65 at 25% instead of 20% by treating the appellant as a private limited company. I find no cause to interfere with the action of I.T.O. Taking into consideration the decision given by me on this similar issue vide Order No. CIT/A/Z2/dated the action of the ITO is accordingly confirmed.
18. Regarding the detailed discussion of reopening the case under section 65 once again with all due respect to the arguments advanced and referred to various sections and other facts for the reasons stated in the beginning of the order, the action of, the ITO is justified and is accordingly maintained."
19. The facts and circumstances in which the re-assessments were made are not at all disputed. It has not been alleged in the notice, the impugned orders or the counter-affidavit that the Assessing Officer was not aware of the fact that the petitioner is owned by PACO and not by the Federal Government.In the counter-affidavit the only ground for initiating the impugned action under section 65 is that the Income Tax Officer had fallen in error at the time of passing original assessm ent orders. In the counter-affidavit filed in reply to amended petition it has been stated that so far the averments relating to owner ship of the company are concerned they are matters of record and need no reply. Again it has been stated that the Company's Ordinance of 1984 has chat the legal character of the petitioner's company hence action taken by I.T.O. Was lawful and that the petitioner is not an` organ of the Federal Government. The emphasis throughout is that the petitioner has described itself time and again as Private Limited Company and therefore it cannot be treated as a Public Company, From these facts it is clear that at the time of original assessment respondent No. 1 knowing well that the petitioner is owned by PACO applied a rate of taxation which is applicable to Public Limited Company. However, he seems to have realized late that on the same set of facts and situation a higher rate could be applied as the petitioner could not be treated a Public Limited Company. The entire background, the facts available on record and also the notice which was issued clearly demonstrated that no fresh information was available to respondent No. 1 at the time of initiating action under section 65. Section 65 cannot be invoked unless definite information has come into the possession of the Income-- tax Officer. In the facts and circumstances of the case can it be contended that since respondent No. 1 has realized his mistake in applying a wrong provision of law while framing original assessment it will amount to an information upon which section 65 can be invoked. In other words as on the same facts and circumstances respondent No. 1 is now of the opinion that another provision of law should be applied for determining the rate of tax it amounts to information on the basis of which action tinder section 65 can be initiated. In both the cases the reply should be in the negative. It is merely a change of opinion and not an information available from the record or from outside agency which can be made basis of such action. In this regard reference can be made to Edu1jee Dinshaw Ltd. v.
20. Income-tax Officer PLD 1990 SC 399 where after reviewing and referring to various judgments of our Supreme Court and High Courts and Indian Courts it was held as follows: "Once all the facts have been fully disclosed by the assessee and considered by the Income Tax Authorities and the assessm ents have been consciously completed, and no new fact has been discovered there can be no scope for interference with these concluded transactions under the provisions of section 65 of the Ordinance on the ground that the Income chargeable to tax under the Ordinance has escaped assessm ent or has been under assessed, etc. In the meaning of clause
(a) or (b) of subsection (1) of section 65 of the Ordinance."
21. We may also refer to the following judgments:
(1) C.P. D-447 of 1988, Bhambhore Ceramic Industries Ltd. v. Income Tax Officer.
(2) C.P. No. D-372 of 1987 N. V. Philips Glocilam Peufabricken v. Income Tax Officer and another (1990) 61 Tax 159 (H. C. Kar.).
(3) Jason International (Pvt.) Limited v. Income Tax Officer and others 1989 PTD 1141.
22. Respondent No. 1 has invoked section 65 only because the corporate status of the petitioner was not properly determined, therefore, it is a question of interpretation of law which is being pressed now for purposes of invoking section 65. The question arises whether such discovery can be called an information sufficient to exercise jurisdiction under section 65. In Kasturbhai Lalbhai v. R. K.
23. Malhotra Income Tax Officer Group Circle II (1), Ahmedabad (1971) 80 ITR 188 the question arose whether a certain information received by the Income-tax Officer expressing the opinion of the Audit Department as to the correct interpretation of section 23 (2) can be said to constitute information on which the Income Tax Officer could act for the purpose of initiating proceedings for reassessm ent against the petitioner under section 147 (b) of the Indian Income Tax Act 1961 which is equivalent to section 65 of the Income-tax Ordinance. The following observation was made: "There may be a case where the Income Tax Officer realises from some expression of opinion by an income tax lawyer at a seminar or by reason of an argument advanced by an income-tax lawyer in the case of another assessee that the view taken by him in regard to the interpretation of a section was wrong. Could it be said that he has received `information' so as to entitle him to take action under section 147 (b)? The view canvassed by the learned Advocate-- General on behalf of the revenue, if taken to its logical end, would mean that, even in cases such as these, the Income- tax Officer would be entitled to re-open the assessment. The safeguard which is introduced by the legislature by insisting on the requirement that the Income-tax Officer must have reason to believe in consequence of some information received after the assessment would be rendered illusory. The dividing line between mere change of opinion on the part of the Income Tax Officer and `information' received from an external source would become blurred. If the opinion of any person as to the state of the law were to be regarded as `information' irrespective of the fact whether such person has competence or authority to pronounce upon the law, it would be easy to disguise mere change of opinion on the part of the Income-tax Officer under the cover of opinion of some other person. Moreover, if opinion of any other person can be regarded as sufficient to warrant initiation of proceedings for reopening an assessment, it is difficult to imagine why change of opinion on the part of the Income Tax Officer himself should not be so regarded by the legislature. `Information' connotes, as pointed out by the Supreme Court, `information of knowledge derived from an external source' and obviously such instruction or knowledge must be from a person, body or authority competent and authorised to give it. It must have an element of authority behind it."
24. It is, therefore, well-settled that receiving or obtaining certain interpretations of a particular provision of law from any department, be it Ministry of Law or CBR or any Legal Advisor or from his own knowledge and reading of the Law books would not constitute information as required by section 65. Bhagwati, C.J.(as he then was) has pointed out to the dangerous results which may follow from a liberal interpretation of the word `information' as sought by the Department as it will give unrestricted discretion in the hands of the Assessing Officer who may on their own interpretation of law set at naught the settled and final assessments.
25. Mr. Shaikh Haider's contention that as the petitioner has not availed the alternate remedy it is not entitled to invoke the Constitutional jurisdiction does not seem to be well-founded. The petitioner brought this action after the Income Tax Officer had passed the assessment order under section
65. The petitioner filed an appeal but during the pendency of this petition, the appeal was dismissed which order has also been impugned by amending the petition. Both the orders are before us and we find that the original as well as the appellate orders have not taken into consideration the provisions of section 65. The preconditions for invoking section 65 were absent and the action taken by respondent No. 1 and confirmed by respondent No. 2 lacked in jurisdiction.
26. In view of the rule laid down in Edulji Dinshaw's case PLD 1990 S.C. 349; and Usmania Glass Sheet Factory v. Sales Tax Officer PLD 1971 S. C. 205, we are of the view that where the action of any authority is challenged on the ground of lack of jurisdiction, the aggrieved party is entitled to invoke Constitutional jurisdiction without availing or exhausting the alternate remedies. In the case of Premier Cloth Mills Ltd. v. Sales Tax Officer, 1972 SCM R 257 the order of the High Court dismissing the writ petition on the ground that appeal was pending before the Special Tribunal was set aside with direction to decide the case on merits. In the present case also the petitioner has challenged the jurisdiction of the respondents to invoke section 65. In such circumstances particularly in fiscal matters the High Courts in spite of availability of alternate remedy or the petitioner having resorted to it which is still pending can grant relief provided the action complained of is without jurisdiction.
27. Similar view has been expressed in C.P. D-447 of 1988. Bhambhore Ceramic Industries Ltd. v.
28. Income-tax Officer, C.P. D-372 of 1987 N.V. Philips Glocilam Peufabricken v. Income Tax Officer and another (1990) 61 Tax 159 (H.C. Kar.) and Jason International (PVT) Ltd. V Income Tax Officer and others, 1989 PTD 1141. As notice under section 65 was without jurisdiction all subsequent orders passed by the same authority or other authorities the whole series of such orders will be void. If the notice and assessm ent order based on it is void how can an appellate order which confirms such order can become valid. Reference can also be made to Calcutta Discount Co. Ltd.v. Income Tax Officer 40 ITR 191 (208) S. C. Sethai Achi v. Income Tax Officer 40 ITR 170 and Modi Spinning and Weaving Mills v. Income-tax Officer 40 ITR 637 (646) where assessment made during the pendency of the writ petition was also quashed.
29. Mr. Shaikh Haider has referred to PLD 1947 PC 247 and (1963) 50 ITR 87 in which it was observed that where the appellate order is passed the original order is merged in it and it is the appellate order which is final and operative. There can be no cavil with this proposition but the fact remains that where the original and appellate orders suffer from want of jurisdiction they can be challenged under the Constitutional jurisdiction of the High Court. In this case respondent No. 1 having no jurisdiction under section 65 made reassessment and respondent No. 2 without correctly adverting to it or applying her mind confirmed the illegal order. The inherent illegality has thus travelled upto the appellate order and its confirmation by respondent No.2 will not make it legal.
30. The learned counsel contended that amendment in petition was made after 2 years of the passing of the order by respondent No.2 and such belated amendment should not be allowed and the petitioner should be deemed to have waived his right. We do not agree with this contention. The petitioner has been agitating against the impugned action from the very beginning. It has never submitted to the order passed by the respondents and explained by Mr. Javed Siddiqui that he has always been under the impression that once the notice and the assessment order passed under section 65 are set aside it will automatically result in vitiating the appellate order. The impression was not correct but the mistake was bona fide. 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.