' BASHARAT AHMAD SHAIKH, J.---The above-noted two appeals arise out of three separate writ petitions filed by two income-tax assessees to challenge the assessment orders and consequent demand notices in respect of the respective incomes relating to bakery business of the appellants at Mirpur. Remedy by way of appeal before the higher Income Tax authority was admittedly available to the appellants but they directly filed writ petitons in the High Court. The High Court has dismissed the writ petitions on the ground that the appellants had not availed of the remedy of appeal available to them. Apart from that the appellants' case was found to be without substance on merits also. Common questions of law are involved in the two cases and arguments were also addressed jointly. Hence this single judgment.
2. The learned counsel for the appellants, Mr. Muhammad Rafique Dar, vehemently contended that the High Court fell in error in dismissing the writ petitions on the ground that the appellants had not availed of the remedy available to them. It was contended by him that Income Tax Officer went out of his jurisdiction in passing the impugned orders and in such circumstances a writ petition is legally competent even if alternate remedy is not exhausted. It was also contended by him that the remedy by way of appeal, in the circumstances of the case, could not be considered as adequate.
The learned counsel relied on a number of cases in support of his contention. The position adopted by Mr. Muhammad Rafique Dar, is vehemently contested by Ch. Muhammad Afzal, the learned counsel for the respondents.
3. Mr. Muhammad Rafique Dar relied on the following reported cases in support of his submissions:-
(1) Pervez Badar-ud-Din v. Income Tax Officer 1987 PTD 611,
(2) Utility Stores Corporation of Pakistan. Ltd. v. Punjab Labour Appellate Tribunal and others PLD 1987 SC 447,
(3) M/s. Burhan Engineering Co. Ltd. v. Income Tax Officer 1985 PTD 465,
(4) Ch. Muhammad Anwar v. Ch. Muhammad Rashid PLD 1987 SC (AJ&K) 41,
(5) Chief Election Commissioner, AJ&K v. Abdul Majid and others PLD 1986 SC (AJ&K) 120,
(6) M/s. Ulbricht's Pak. v. Deputy Collector, Central Excise 1971 PTD 551,
(7) Brig. (Rtd.) Muhammad Aslam Khan v. Azad Govt. Of Jammu and Kashmir 1983 CLC 551,
(8) Cannon Product Ltd. v. Income Tax Officer 1985 PTD 465,
(9) Pak. Tobacco Co. Ltd. v. Pakistan through Secretary, Ministry of Finance and 4 others 1991 PTD 359 and
(10) M/s. Julian Hoshang Dinshaw Trust and others 1992 SCM R 250 =1992 PTD 1.
4. In the first six cases noted above the question of adequate alternate remedy was not discussed at all. In fact in the first two cases departmental appeals were filed and had been dismissed when the writ petitions were moved, while in the Burhan Engineering Company's case writ petition was dismissed on the ground that the petitioner had no cause of action. In Ch. Muhammad Anwar's case this Court held that the High Court can exercise its Constitutional jurisdiction when flagrant disregard of the statutory provision is committed. In the case of Abdul Majid this Court laid down that the situations in which findings of fact recorded by a tribunal of special jurisdiction can be disturbed in writ jurisdiction. In Ulbricht's Pak. Ltd. Also the point involved related to findings of fact.
In Muhammad Aslam Khan's case it was held by this Court that mere presence of alternate legal remedy was not sufficient to exclude the Constitutional jurisdiction of the High Court and that the jurisdiction could only be ousted if alternate remedy was equally efficacious, expedient and expeditious.
5. Remaining three cases cited by the learned counsel for the appellants are cases which relate to the income-tax matters and have direct bearing on the present controversy. In Cannon Product Ltd.'s case Sindh High Court held that the High Court would decline to exercise its Constitutional jurisdiction in case it finds that under the relevant law the machinery for getting the redress has been provided for but at the same time if it finds that the action of the concerned Government functionaries is without jurisdiction and contrary to law the High Court may entertain a writ. The High Court decided 5 petitions by this judgment. Three of them were dismissed while the remaining two were accepted. The facts were that returns filed by the assessees under the self-assessment scheme were selected for detailed scrutiny, whereupon the writ petitions were filed in the High Court on the ground that the order was without jurisdiction because their cases fell in a category which could not legally be subjected to detailed scrutiny. This plea was accepted.
6. In Pak. Tobacco Company's case a writ petition was directly filed to challenge the assessment order passed by the Income Tax Officer. An objection was raised about the maintainability of the writ petition. It was held by the Sindh High Court that "If on examination we find that the interpretation placed by respondent No,5 is palpably wrong resulting in miscarriage of justice we would be justified in entertaining these petitions". In holding that view reliance was placed, inter alia, on `Nawabzada Muhammad Amir Khan v. Collector of Estate Duty' (PLD 1961 SC 119) in which it was held by the Supreme Court that the rule that the Court will not entertain a writ petition when other appropriate remedy is yet available is not a rule of law barring the jurisdiction of the Court but it is only a rule by which the Court regulates the exercise of its own jurisdiction. A reference was made to page 107 of Halsbury Laws, Vol. III.
7. In order to arrive at the correct conclusion on the ultimate question under discussion it seems necessary to first ponder over the question whether the existence of an adequate alternate remedy creates jurisdictional hurdle or is only regulatory in nature. While there can be no doubt that, we say so with great respect, that in Amir Muhammad Khan's case the Supreme Court of Pakistan laid down correct principle of law, but it has to be pointed out that this judgment was given in light of the provisions of the Constitution of Pakistan, 1956 which was, although abrogated by the Chief Martial Law Administrator in 1958, being followed as law of the land in so far as writ jurisdiction was concerned. In that Constitution the power of issuing writs was vested in the High Court by virtue of Article 170 which was to the following effect:-- "170. Notwithstanding anything in Article 22 each High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases any Government, directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, for the enforcement of any of the rights conferred by Part II and for any other purpose."
8. It may be seen tnat this provision was, broadly speaking, a referential legislation rather than a self-contained provision. The reference was to prerogative writs which were in vogue in England and some other countries and were introduced in Pakistan for the first time in 1954 by inserting section 223-A in the Government of India Act and was followed by Article 170 of the Constitution of 1956. Scope of that power was not defined in these Constitutional provisions but was to be understood in light of the concept, practice and procedure prevalent in those countries. However, the Constitutional provisions conferring writ jurisdiction on the High Court underwent a fundamental change on the coming into force of Constitution of Pakistan, 1962. Its Article 98 which related to writ jurisdiction was a self-contained provision which did not refer to the English writs.
Article 98 (omitting some portions) may be reproduced:- "(2) A..a High Court... May, if it is satisfied that no other adequate remedy is provided by law--- ' make an order--
(i) directing....(a public functionary)...To refrain from doing that which he is not permitted by law to do or to do that which he is required by law to do; or
(ii) declaring that any act done or proceeding taken by ....(a public functionary) has been done or taken without lawful authority, and is of no legal effect."
' The same phraseology was transposed to Article 199 of the Constitution of Pakistan, 1973 and was subsequently borrowed while enacting section 44 of the Azad Jammu and Kashmir Interim Constitution Act, 1974. The provision for making an order is preceded by the recital that such an order may be made "if the High Court is satisfied that no other adequate remedy is provided by law". Since this condition is now incorporated in the Constitution it cannot be said any longer that it is not a rule of law barring jurisdiction of the Court and is only a rule by which the Court regulates the exercise of its own jurisdiction as was held by the Supreme Court of Pakistan in Amir Muhammad Khan's case in light of the phraseology of Article 170 of the 1956 Constitution. It is, therefore, difficult to agree in light of the prevalent Constitutional provisions that if an interpretation placed by an executive authority is palpably wrong and leads to miscarriage of justice the High Court can directly entertain a writ petition. The High Court can only directly entertain a writ petition if it finds that alternate remedy is not adequate. In our view existence of another adequate remedy is a rule of law which ousts the jurisdiction of the High Court and we hold accordingly.
9. The judgment in M/s. Julian Hoshang Dinshaw Trust's case is a recent judgment in which the Supreme Court of Pakistan has laid down important principles of law on the subject under examination. This is a case in which assessment order passed by an Income-tax Officer was directly challenged by filing a writ petition and the Supreme Court, by vacating an order of dismissal passed by the High Court, ordered the acceptance of the writ petition and laid down that in the circumstances of the case a writ petition was maintainable without filing appeal before the Income Tax hierarchy. The facts of the case were that M/s. Julian Hoshan Dinshaw Trust was shareholder of a private limited company known by the name of Eduljee Dinshaw Limited which owned some agricultural land and other immovable properties. Some land owned by the said company was acquired and compensation received therefor was paid to the company. Part of the compensation was also paid to the aforesaid Trust which represented the share of the Trust. Some amount was also paid to the Trust as dividend out of capital gains on the sale of the immovable property. When the Trust filed the income-tax returns a letter was sent to the Income Tax Officer explaining that the payments mentioned above received by it were of capital nature and, therefore, were not liable to tax. The Income Tax Officer, however, asked the Trust to explain the nature of receipts and furnish the relevant documents, including the dividend warrant, failing which the payments would be included in the total income of the Trust and assessed to tax. The trust filed two writ petitions before the Sindh High Court and sought declaration that these payments could not be subjected to taxability. A direction was also sought restraining the Income Tax Officer from assessing the receipts as income in the hands of the Trust. The justification for directly approaching the High Court as explained in the writ petitions was that a similar receipt in the hands of another shareholder of the aforesaid Company was treated as his dividend income and charged to income-tax by the Income Tax Officer by relying on section 151 of the Income Tax Ordinance, 1979. The Trust expressed the apprehension that the same treatment would be meted out to it. The writ petition filed by the Trust was dismissed by the High Court by observing that whether or not an amount received by an assessee was assessable as income and chargeable to tax was a matter which fell within the jurisdiction of the Income Tax Officer and the remedy by way of writ could not be treated as a substitute for appeal, revision and reference. Two other writ petitions involving similar points were also dismissed by the High Court and three appeals arising out of them were decided by the Supreme Court in the judgment cited before us. The Supreme Court referred to a circular issued by the Central Board of Revenue which laid down the guideline that that receipt in the nature of capital gain arising from the sale of immovable property did not constitute income but when that fund was distributed it became liable to tax upon reaching the hands of the recipients. Muhammad Afzal Lone, J. Speaking for the Court observed that:-- ' It is not understandable that in the presence of the directions embodied in the Circular, how an Income Tax Officer would lend any weight to the appellants' claim of immunity from taxability of the receipts in dispute. Indeed, it would be very difficult for the Assessing Officer to render an independent adjudication. To quote an instance of lack of objectivity, the attention of the High Court was invited to an order passed by the Income Tax Officer, imposing tax on similar receipt in the hands of another shareholder of the Company, namely Russie M. Dinshaw. It was in this context that the appellants instead of throwing themselves at the mercy of the Income Tax Officer chose to approach the High Court under Article 199 of the Constitution. It is correct that the Income-tax Appellate Tribunal is not under any compulsion to follow the Circular, but there are indications on the record before us that in an identical case the chargeability of the receipt was endorsed by the Tribunal."
' After making these observations the learned Judge proceeded to hold that:- "The superior Courts have repeatedly exercised the writ jurisdiction in appropriate cases, involving fiscal rights and on the allegation of misapplication of law or abuse of power stepped into examine whether or not public functionary concerned acted in accordance with the powers conferred on him by the Statute. In M/s. Usamoa Glass Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong (PLD 1971 SC 205) this Court examined in detail whether the glass sheets manufactured by the assessee were covered by exemption from payability of tax granted through a notification issued under the Sales Tax Act, and repelled the argument against the reviewability of the orders of the Sales Tax Authorities by the High Court. In a recent case Eduljee Dinshaw v. Income Tax Officer 1990 PTD 155 this Court discussed at some length the case-law on the subject and noticed that the High Court has made frequent interventions, in the fiscal disputes, in exercise of writ jurisdiction. Upon careful consideration of the facts of the case before us, we are of the view that it was not necessary for the appellants to have travelled through grooves of the procedure laid down in the Statutes to approach the High Court. In our opinion, the writ petitions were competent, and a decision on merit of the issues raised therein was fully warranted."
' Then the Court proceeded to deal with the case on merits and, after -a detailed analysis, it was found that:- "14. According to the definition of the term income, as given in the Income Tax Act/Ordinance, the receipt cannot in any manner be categorized as income of the Company. It is, therefore, wholly wrong to give the colour of income, to the receipt in the hands of the company and then treat it exempt from the income-tax. Thus, the department's reliance on section 151 is entirely misconceived."
10. Then the pleas raised in the writ petition were examined on merits and it was ultimately declared that the receipts in dispute were exempt from income-tax and could not be brought under charge. Consequently the action taken by the assessing authority in this behalf were quashed.
11. From an analysis of the judgment it stands crystallized that the Court found that tax was being levied on an amount which was exempt from income-tax. It was also found that it would be very difficult for the assessing officer to render an independent adjudication in presence of the Central Board of Revenue Circular mentioned above and also because a wrong interpretation had clearly been adopted by the Income Tax Officer in another case. In these circumstances the contention of the assessees that there was justification to approach the High Court directly instead of throwing themselves at the mercy of the Income Tax Officer was given weight and it was held that in the circumstances of the case "it was not necessary for the appellants to travel through grooves of the procedure laid down in the statute to approach the High Court". This is an obvious reference to remedies provided in the Income Tax Ordinance under which at one stage a reference on a question of law can be made to the High Court. In our opinion, although not stated in so many words, the principle laid down by the Supreme Court of Pakistan is directly linked with the existence or otherwise of an adequate remedy. By referring to the grooves of procedure laid down in statute the Court was recognizing the fact that such matters in the ultimate analysis have to reach the High Court and where the Income Tax Officer is acting without lawful authority and the matter is brought directly to the High Court, without exhausting the departmental remedies, the High Court could issue a writ. In our opinion this is the same thing as saying that in such a situation the remedies available within the departmental hierarchy cannot be termed as adequate. In our view the direct interference of the High Court or the Supreme Court where the concerned authority is acting without lawful authority will not be grounded so much on the finding that the proceedings were without jurisdiction but more firmly on the finding that the departmental remedies had been rendered inadequate in the circumstances of the case.
12. Having dealt with the legal aspect, we now proceed to examine the facts to find out whether the appellants were justified in filing the writ petitions directly against the assessment orders of the Income-tax Officer because alternate remedy available to them by way of appeal was not adequate.
' In the writ petition filed by Abdul Rahman and Abdul Ghafoor, owners of Rehman Bakery, on 24th December 1990 (subsequently amended) it was stated that they were being assessed to income- tax from year 1980-81. On 9th of July 1987 Income Tax Officer, Mirpur Circle adopted totally a new basis and method in order to assess the income of the petitioners for the assessment year 1985-86 under sections 63 and 65 of the Income Tax Ordinance and fixed the average daily sales at Rs,2,500 and also gross profit at 14%. The assessment order passed by the Income-tax Officer on 9th of July 1987 was set aside by the Income Tax Appellate Tribunal on 8th of October 1989. The Tribunal held, as claimed, that a report prepared by the member of the survey team was illegally and improperly prepared and could not be relied upon and that the daily sales assessed in that report were wrong. It was further stated in the writ petition that the Income Tax Appellate Tribunal set aside assessm ent of income of the petitioners assessed as Rs,60,000 and accepted that the correct income was Rs,25,000. The amount of Rs,25,000 had been assessed by Income Tax Officer while the amount of Rs, 60,000 was assessed by the Income Tax Officer Survey. It was then averred that the Income Tax Officer Mirpur once again made use of the survey report in his assessment order passed on 28th of September 1988 in respect of assessment year 1986-87. An appeal was taken to the Appellate Assistant Commissioner which was accepted on 22nd April 1989 and the case was remanded to the Income Tax Officer. An appeal was subsequently filed by the assessee before the Appellate Tribunal. In spite of the appeal Income Tax Officer started assessment proceedings de novo for assessm ent year 1986-87. The assessment was concluded and the income of the petitioner was assessed at Rs,1,87,500 on the basis of the same survey report. The income for the year 1986-87 was assessed at Rs,40,000. This was also done on the basis of survey report mentioned above. As many as 18 grounds were taken in para. 17 of the writ petition on the basis of which it was alleged that the assessment order passed on 28th of May 1990 for the assessm ent year 1986-87 and the subsequent demand notice based on it were without jurisdiction and illegal. It was also submitted that there was "no alternate, efficacious, effective and speedy remedy" available to the petitioner and that very important interpretation of law is required in the writ petition. One of the grounds incorporated in the writ petition was that the assessment order was without jurisdiction and void.
13. The above facts show that in respect of income relating to assessment year 1986-87 the Appellate Assistant Commissioner accepted an appeal filed by the appellants and remanded the case to the Income Tax Officer. This order was challenged before the Appellate Tribunal but in spite of the fact that the appeal before the Appellate Tribunal was pending the Income Tax Officer conducted assessm ent proceedings in respect of assessment year 1986-87. This order was challenged by filing a writ petition. Although it has been alleged that the order was without jurisdiction and void but the learned counsel for the appellants was not able to give us any valid reason how this order could be termed as without jurisdiction. The Appellate Tribunal did not pass an order prohibiting the Income Tax Officer from taking assessm ent proceedings de novo. Mr. Muhammad Rafique Dar vehemently contended before us that the Income Tax Officer could not base his assessment on the survery report which had been set aside by the Appellate Assistant Commissioner. In the order of the Appellate Assistant Commissioner passed on 22nd of April 1989 the matter relating to the survey report was discussed in the following terms:-- "6. The learned counsel contended that the survey report was not confronted to the appellant. I agree with the learned counsel on this point as it has been held in many cases that where an I.T.O.
Rejects the assessee's version and makes the assessment on the basis of Inspector's report or a survey team, he should give a notice of finding to the assessee before proceeding under section 63(4). Since no such notice was given by the learned I.T.O., the assessment is bad in the eye of law."
14. If follows that the survey report under reference could be made use of by the Income-tax Officer after giving a notice to the assessee. In the impugned order of the Income Tax Officer it has been specifically mentioned that in response to the notice sent to the assessee the counsel for the assessee attended from time to time and obtained copies of survey report and filed written arguments. In the writ petition filed in the High Court the assessee did not allege that he had not been confronted with survey report although he raised a number of grounds about the legality of the survey report. The Appellate Assistant Commissioner did not hold in his order of remand that the survey report had been prepared illegally or that it suffered from any other legal defect. The direction given by the Appellate Assistant Commissioner was duly followed by the Income Tax Officer on this point. It appears that the main grievance of the assessee before the Income Tax Officer was that he was not legally competent to conduct the de novo proceedings so long as the appeal before the Appellate Tribunal was pending. In his order impugned before the High Court the Income Tax Officer observed that there was no bar in completing the assessment in absence of a stay order from the higher authority. We do not find that the appellant has been able to make out a case that the Income Tax Officer acted without jurisdiction or committed patent illegality so, that it may be said that it was not necessary for assessee to throw himself at the mercy of the higher Income Tax Authorities and rightly came directly to the High Court on the ground that departmental remedy was not adequate.
15. The facts in Muhammad Ishaque's case, as stated in the writ petition, were that Muhammad Ishaque was the proprietor of the Bakery known as "New Alfateh Bakery" in Mirpur Town. He started business in 1986, but since the business was carried out for 5 months only which was at the preliminary stage no return was filed for the assessment year 1986-87.
11. Was stated that taxable income was for assessment years 1987-88, 1988-89 and 1989-90 and income-tax returns were voluntarily submitted alongwith payment of advance income-tax under the self-assessm ent and simplified scheme. Income of Rs,32,000 for the year 1987-88, Rs,33,000 for the year 1988-89 and Rs,33,500 for 1989-90 were duly accepted as correct by the Income Tax Officer. However, on 26th of January 1987 Income Tax Officer (Survey Circle) issued notice under section 56 and directed the petitioner to file returns for the assessment years 1985-86 and 1986-87.
This direction was complied with and nil income for 1985-86 and Rs,255 for 1986-87 was declared.
This declaration was not accepted and Income Tax Officer assessed the income of the petitioner of Rs,22,000 in place of nil income for 1985-86 and Rs,32,000 in place of Rs,255 for assessment year 1986-87. While doing so reliance was placed on survey report prepared on 25th of August 1986 which had been prepared by the said Officer as the head of Survey Team after visiting the business of the petitioner. The average daily sale was fixed at Rs,550 during the period under assessment and applied 20% gross profit rate was levied. The appellant filed an appeal before the Appellate Assistant Commissioner which was accepted and the case was remanded to the Income Tax Officer Survey for de novo assessm ent under law after making inquiry which was directed to be conducted in respect of the period of business and after supplying the copies of the survey report to the petitioner. It was averred in the writ petition that Income Tax Officer illegally started assessm ent proceedings in continuation of the remand order and issued notice to the petitioner on Ist of April 1990 under section 61 of the Income Tax Ordinance. It was contended that the case had not been remanded to the Income Tax Officer, but had been remanded to the Income Tax Officer Survey and that the Income Tax Officer was not even a successor of Income Tax Officer Survey. Objections in the nature of preliminary legal objections were filed before the Income Tax Officer and a subsequent reminder was also sent requesting the said officer to drop the proceedings and also to give personal hearing. This request was not acceded to and without hearing the petitioner and without considering the written preliminary objections the Income Tax Officer passed an assessm ent order under section 62 in the absence of the petitioner. The income for the year 1985-86 was assessed at Rs,56,000 while for year 1986-87 it was estimated as Rs,58,000. Demand notice was accordingly issued. It was also complained that assessment order and subsequent demand notice made on 28th of May 1990 were despatched on 26th of June 1990 with ulterior motive and it had not yet been served on the petitioner when the writ petition was filed.
The demand notice and the assessme nt order of 28th May 1990 were challenged directly by filing a writ petition in the High Court. One of the grounds was that the order was without jurisdiction and had been passed without lawful authority. It was also submitted that the case had been remanded to the Income Tax Officer Survey and not to the Income Tax Officer and in light of the remand order no jurisdiction was acquired by the Income Tax Officer.
16. In respect of the order impugned before the High Court no error of jurisdiction or any patent illegality has been brought to our notice. The assessment order, mentioned above, was passed in obedience to the remand order of the Assistant Appellate Commissioner. It had been directed by the Appellate Assistant Commissioner that the survey report should be supplied to the assessee and inquiry should be conducted as to the period of business. It is stated in the assessment order that copy of the survey report was supplied to the assessee. In the writ petition many objections were raised about the validity of the survey report but it was not alleged that it had not been supplied to the assessee. The main ground raised by the learned counsel for the appellants Mr. Muhammad Rafique Dar was that the case had not been remanded to the Income Tax Officer. The copy of the order of the Appellate Assistant Commissioner shows that it is not factually correct that the case was remanded to the Income Tax Officer Survey. It was simply remanded to the Income Tax Officer. The setting up of survey team was a temporary administrative measure and after the team had been dissolved the proper order to be passed was to remand the case to the Income Tax Officer as was done by the Assistant Appellate Commissioner. Therefore, we find no substance in the argument advanced on behalf of the appellants that the Income Tax Officer had no jurisdiction in the matter.
' We have upheld the view taken by the High Court that the writ petitions were not maintainable but it was contended by Mr. Muhammad Rafique Dar that merits of the case have also been gone into by the Court. We agree with the learned counsel and order that in the judgment of the High Court any reference to merits of the case will not be binding on the Income Tax Authorities or any other Court.
' With these observations the appeals are dismissed with no order as to the costs.