' MUHAMMAD AFZAL LONE, J.---This judgment shall dispose of C.A. No, 345-K/90 and C.A. No, 346- K/90, filed by Adamjee Insurance Company Ltd. And Habib Insurance Company Ltd. Respectively, as common questions of law and facts are involved therein.
2. So far as C.A. 345-K/90 is concerned, the dispute relates to assessment years 1976-77, 1978-79 and 1979-80. In the other appeal the assessment years 1976-77 to 1979-80 are involved. The appellants' case is that for these assessment years they prepared annual accounts in pursuance of section 11 of the Insurance Act, 1938, which were submitted by them to the Controller of Insurance subject to adjustments as per clauses 'A' and 'B' of Rule 6 of the First Schedule to Income Tax Act, 1922. These accounts included the item "provision of tax" in respect of the profits of each assessm ent year; actual tax paid or payable out of the said "provision" by debiting the same was also shown in the annual accounts submitted to the Controller. The Income Tax Officer completed these assessm ents under section 62 of the Income Tax Ordinance, 1979.
3. Long after the finalisation of these assessments the Assessing Officer served the appellants with notices under section 65 of the Ordinance on the ground of concealment of income; re-opened the cases, declared the amount of ' the tax paid from the reserve 'provision for taxes' as inadmissible allowance; added the same to the income and brought it under charge. Further on the ground of concealment of income, the Income Tax Officer proceeded under section 111 of the Ordinance and imposed 100 per cent. Penalty in respect of each assessm ent year. The learned Judges noticed that Habib Insurance Company filed appeals before the Commissioner Income Tax against the reassessment orders, which failed.
Thereafter, against these orders they preferred appeals before Income Tax Appellate Tribunal. The other appellant namely Habib Insurance Company did not avail of any such remedy. Both the .
Appellants, however, invoked the writ jurisdiction of the High Court, but their Constitutional petitions were dismissed in limine by a Division Bench of the Karachi High Court; as in the opinion of the learned Judges the appellants had adequate alternate remedy by way of appeal, revision and reference to the High Court and thus no relief could be granted to them in exercise of the Constitutional jurisdiction. The fact that Habib Insurance Co. Had chosen to file appeals also weighed with the learned Judges.
4. On behalf of the appellants at the leave grant stage it was contended that the alternative remedy provided under the Statute is not equally officacious and expeditious; and as it was a case of excess of jurisdiction the orders passed by the Assessing Officer were liable to be removed under the constitutional jurisdiction of the High Court. The following further contentions were raised on merits:--
(i) "that as section 111 provides penalty for concealment of income, the section is not attracted as there is no finding of concealment and the penalty order is without jurisdiction;
(ii) that ex facie reopening of the past, closed and finalised assessment orders was bad as the reopening is based on change of opinion on the statutory accounts originally furnished, examined and assessed which provided all and whatsoever the details, including 'taxes paid' and the same were/are on record and considered when the original assessment orders were passed therein 'provision for taxes' was disallowed which disallowance was set aside in the appeals/references by the Tribunal/High Court.
(iii) that the taxes were paid out of and from the 'provisions for taxation' and such payment could not form part of the Profits and Loss Account or the 'taxable income'. Further, the payments being outgoings, cannot be added to the income as receipt. Income is a receipt and outgoing cannot be given that status."
The contentions advanced by the appellants were considered as involving substantial questions of law of public importance; leave to appeal was accordingly granted.
5. In support of these appeals it is argued that the appellants' liability to tax has to be worked out under Rule 6 of the First Schedule to the Income Tax Act, 1922 read with its section 10(7) which ordained that the profits and gains of any business of insurance other than the life insurance shall be taken to the balance of the profits disclosed in the annual accounts, copies whereof are required under the Insurance Act, 1938, to be furnished" to the Controller of Insurance, after adjusting such expenditure which may under The provisions of section 10 of the Act be allowed for in computing the profits and gains of a business". Reliance was placed on section 11 of the Insurance Act which deals with the preparation of annual accounts and requires that balance sheet should be drawn in the form set forth in Part II of the First Schedule and accounts maintained as per regulations contained in Part I of the said Schedule to the Insurance Act. It is urged that since in the annual accounts the item regarding "provision for taxes" did not constitute expenditure, the Income Tax Officer had no power to add back the same to the balance of profits and bring it under charge. To highlight his point, the learned counsel further 'dilated upon the concept Of income' and 'expenditure' under the income Tax Act.He relied upon Commissioner bf Income Tax, Central Zone 'A1 Karachi v. Phoenix Assurance Co. Ltd. 1991 PTD 1028 in which the rule earlier enunciated by this Court in C.I.T. v. Alpha Insurance Co. LW. (PLD 1981 SC 293) to the effect that the accounts submitted by an Insurance Company to the Controller of Insurance under the Act, are binding on the Income Tax Officer, was followed and it was observed:-- "From the authoritative pronouncements of this Court, the law seems to be settled that finality attaches to the accounts submitted by the assessce insurance company under the Insurance Act to the Controller of Insurance and the limited jurisdiction vesting in the Income Tax Officer is only to exclude expenditure from the balance of .Profits in such accounts which is not permissible under section 10 of the Act. Under subsection (7) of section 10 of the Act the profits and gains of any business of Insurance and the tax payable thereon, is required to be computed in accordance with the rules contained in the First Schedule to the Act.
' Therefore, the Income Tax Officer, in the face of these statutory provisions, is not competent to upset the integrity of the accounts submitted by the assessce under the Insurance Act, by applying the ordinary rules for computation of profits and gains and for assessment of tax thereon, in the light of provision of the Income Tax Act in respect of the income in regard to the head 'business'.
The contention of the learned counsel, therefore, that the return filed by the assessce was not in accordance with Regulation 1 of Part 1 of the Second Schedule to the Insurance Act is untenable.
Similarly his submission that 'reserve' cannot become expenditure even though it may be mentioned on the debit side, because the money is not paid out irretrievably, is also irrelevant. On the contrary if the item in question did not in substance and essence constitute expenditure, it would be out of the power of the Income tax Officer to apply the provisions of Rule 6 to exclude and addback the same to the balance of profits in order to bring it within the tax net."
6. As regards the imposition of penalty, the case put forth by the appellants is that there was no concealment, as the accounts prepared by them, under the Insurance Act, had been placed before the Income Tax Officer, who before passing the assessment orders scrutinized the same; that at the most the case involved interpretation of the relevant provisions of the Income Tax Act and the Insurance Act, merely because the Assessing Officer, who made additional assessments, took a view of these provisions different than the one which prevailed with the Income Tax Officer, who made the original assessm ent, would not furnish a lawful basis to dub the amounts in question as concealed income. In any case, it was submitted that, since the provision relating to penalty has an element of criminal legislation, the Income Tax Officer, while applying the same, was bound to give reasons to sustain the imposition of penalty, which he failed to provide in the orders impugned before the High Court. It was further urged, as already observed, full disclosure of all relevant information regarding annual accounts was made before the Income Tax ,Officer, who after due application of his mind, passed the assessment orders; it was the same material on which the additional assessm ents impugned before the High Court were rested. The submission was that since there was no definite information as to the concealment or escaping of the income from assessm ent, the additional assessments merely amounted to change of opinion. Section 65 of the Income Tax Ordinance, thus, could not have been invoked.
7. Much emphasis was laid down by the learned counsel on the question of validity of the High Court's refusal to exercise writ jurisdiction. It was pointed out that as all the material facts were already present on the record before the Income Tax Officer, notice under section 65 suffered from jurisdictional defect and, therefore, the High Court's jurisdiction under Article 199 was justifiably invoked. Reliance was placed on Nagina Silk Mills v. Income Tax Officer (PLD 1963 SC 322) in aid of the proposition that in case of absence or excess of jurisdiction or when there is an error apparent on the face of the record a writ in the nature of certiorari may be granted even if alternate remedy under the relevant Statute is available.
8. The impugned order reflects that the ,High Court made only a passing reference to the merits of the case and, as stated earlier, dismissed the writ petition because in its opinion the appellants had an adequate alternate remedy under the Income Tax Ordinance. The question of maintainability of the Constitutional petition, therefore, needs a little closer examination and the necessity to evaluate the appellants' submissions on merits would arise only if the doctrine of alternate remedy is found to have been misapplied by the High Court. It will be seen that under Article 199 the High Court is empowered to issue a writ, if as borne out from Sub-Article (1) "it is satisfied that no other adequate remedy is provided by law". Sub-Article (1) thus, confers on the High Court a discretion of fairly wide amplitude but at the same time it imposes a responsibility on the High Court to exercise the discretion with some circumspection. The satisfaction of the High Court envisaged by sub-Article (1) that no other adequate remedy provided in law is available to the aggrieved party, is condition precedent for exercise of jurisdiction under Article 199. It was in exercise of this power that the High Court refused to intervene. The question is whether this refusal is improper and not guided by judicial consideration. If the exercise of the discretion by the High Court is not found to be unreasonable and perverse, it is the settled practice of this Court not to interfere with such discretion. In this connection it has already been noticed that so far as Habib Insurance Company is concerned, they filed appeals against the additional assessments, but simultaneously sought their removal through judicial review. Ordinarily when the aggrieved party itself goes for appellate remedy provided by the Statute under which the impugned order is rendered, such remedy by conduct of the party, is to be considered as adequate and should be perused unless some positive reasons are discovered indicating that it is not equally efficacious. It has already been indicated in the preceding part of this judgment, that the learned counsel for the appellants has endeavoured to canvass that notices under section 65 are without jurisdiction; as according to him it being case of mere change of opinion, section 65 was not at all attracted.
9. It is difficult to agree with the learned counsel and dub the notices as without jurisdiction. Want of jurisdiction in a Tribunal is usually described as unlawful usurpation of power, but such does not appear to be the case here. The Income Tax Officer might have gone wrong in applying section 65, but in the circumstances of the case, the issuance of notices cannot be dubbed as a usurpation of power. If the notices really suffered from jurisdictional defect, then reviewability was not to exception. The reason being that no appeal lies against such a notice, and it can well be said that no adequate remedy is provided by law against the same. But after the passing of the assessment orders the position has drastically changed, for, these orders can be subjected to appeal and in fact one of the appellants did file the appeals. It hardly needs to be pointed out that appellate order of the Tribunal, giving rise to the question of law, can be lifted before the High Court through a reference application, and jurisdictional issue raised there qua the notices, and the assessments brought under challenge. But where a notice under section 65, culminates into an assessment order, which can be assailed through an appeal,but no appeal is filed and the assessee approaches the High Court, very strong reasons are needed to allow him to bypass that remedy.
10. In Muhammad Arif Dar v. Income Tax Officer (PLD 1989 SC 109) this Court upheld the High Court's refusal to interfere in exercise of writ jurisdiction, with reassessment order passed in pursuance of notice under section 65 and maintained:-- "One of the conditions for grant of relief in writ jurisdiction of the High Court is that the petitioner before it should not have any alternative adequate remedy. In this case, a remedy by way of appeal, as mentioned in the impugned order, was such remedy. Therefore, it is correct that no relief could be granted to the petitioner under Article 199 of the Constitution."
' Similar was the view expressed in Commissioner of Income Tax v. Hamdard Dawakhana (Waqf)
(PLD 1992 SC 847 at pp. 861-862) reproduced below:-- "Before parting with the judgment we may observe that in cases where any party resorts to a statutory remedy against an order he cannot abandon or bypass it without any valid and reasonable cause and file Constitution petition challenging the same order. Such practice, in cases where statute provides alternate and efficacious remedy up to High Court, cannot be approved or encouraged. In a recent judgment of this Court in CA. 79-K of 1991, one of us (Ajmal Mian, J.) in similar situation observed as follows:-- ' We may now revert to the question, whether the appellant was justified to file above Constitution petition against the order of the Tribunal instead of invoking section 136 of the Ordinance for making a reference to the High Court. According to Mr. Rehan Naqvi, a reference under the above provision would not have been adequate and efficacious remedy as it would have taken years before it could have been heard. The same could be true for a Constitution petition. The tendency to bypass the remedy provide under the relevant statute and to press into service Constitutional jurisdiction of the High Court has developed lately, which is to be discouraged. However, in certain cases invoking of Constitutional jurisdiction of the High Court instead of availing of remedy provided for under the relevant statute may be justified, for example when the impugned order/action is palpably without jurisdiction and/or mala fide. To force an aggrieved person in such a case to approach the forum provided under the relevant statute may not be just and proper.'
' In the present case, the appellant had opted to avail of the hierarchy of forums provided for under the Ordinance up to the stage of filing of appeal before the Tribunal and, therefore, it would have been proper on the part of the appellant to have invoked section 136 of the Ordinance for making a reference to the High Court instead of filing a Constitutional petition. In our view, once a party opts to invoke the remedies provided for under the relevant statute, he cannot at his sweet will switch over to Constitutional jurisdiction of the High Court in the mid of the proceeding in the absence of any compelling and justifiable reason."
' For all these reasons, we hold that the discretion exercised by the High Court in dismissing the writ petition on the rectitute of availability of adequate alternate remedy, is well-grounded and does not call for interference. There is no merit in these appeals, which arc dismissed, leaving the parties to bear their own coats.