1. ' NASIM HASAN SHAH, ACTG. C.J.---This judgment will dispose of the above-noted appeals as all of them involve the same question of law, namely, whether the amendment made in subsection (6) of section 18-A of the Income-tax Act, 1922 by the Finance Act of 1973 whereby the additional amount of tax under subsection (6) of section 18-A could only be charged for a period not exceeding 15 months, extended also to the cases of assessees who had submitted their returns before the coming into force of the said amendment, but their cases of regular assessment had not yet been finalized and were still pending.
2. ' For answering this question, reference to the facts of the case of Commissioner of Income Tax v.
3. M/s. Shahnawaz Limited (Civil Appeal No,210-K of 1990) will suffice.
4. ' The relevant facts of the said case are that the subject-matter therein pertained to the assessm ent year 1971-72. A return of income by the assesseeCompany was submitted within the prescribed period. However, the assessment order was not passed for considerable time and was passed ultimately on 16-9-1974.
5. ' The Income Tax Officer who framed the assessment found that the assessee had paid lesser amount of 'Advance Tax' than was required to be paid under the provisions of section 18-A(1) of the Income-tax Act, 1922 and, accordingly, additional tax at the rate of 2% was imposed on the balance outstanding on the 80% required to be paid for the period from 15-9-1971 to 16-6-1974. A notice of demand was issued accordingly.
6. ' The respondent assessee submitted an appeal before the Appellate Assistant Commissioner against this order which was allowed vide judgment dated 2-12-1974. Feeling aggrieved, the Department preferred an appeal before the Appellate Tribunal .Which was rejected vide order dated 23-8-1976. The view expressed by the Tribunal in its appellate order was that the question of payment of additional tax was a procedural matter and the amendment made in relation thereto by the Finance Act, 1973 was of a procedural nature and hence operated retrospectively.
7. Accordingly, the additional tax could not be imposed for more that 15 months and the Appellate Assistant Commissioner had, therefore, rightly modified the order of the Income Tax Officer.
8. ' The, Department submitted an application to the Tribunal for reference of the question of law arising out of its order to the High Court, but this application was rejected by the Tribunal on 15-4- 1978. Thereafter the department moved the Sindh High Court under section 66(2) of the Income- tax Act, 1922 and the said application was heard alongwith the several other similar cases and disposed of by a common order passed on 7-7-1987.
9. ' The High Court in the course of its order observed:- "Prior to its amendment by the Finance Act, 1973, subsection (6) of section 18-A in case an assessee came within the mischief of this subsection, such assessee was required to pay an additional amount, described as 'additional tax', at the rate of 2% per mensem upon the short fall for the period from the first of April of the year in which payment against the tax was made, up to the date of regular assessm ent. If the regular assessment was delayed for any reason, the assessee was adversely affected inasmuch as till such time the regular assessment was made, the liability to pay additional tax at the rate of 2% per mensem continued."
10. ' The provisions of subsection (6) of section 18-A read as under: "(6) Where in any year an assessee had paid tax under subsection (2) or subsection (3) on the basis of his own estimate and the tax so paid is less than eighty per cent. Of the tax determined on the basis of the assessm ent under section 23, hereinafter called regular assessment, and calculated in the manner laid down in subsection (1) so far as such tax relates to income to which the provisions of subsections (2), (2A) and (2B) of section 18 do not apply an additional amount of tax at the rate of two per cent. Per mensem from the first day of April in the year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent."
11. ' The High Court went on to observe:- "A happy and remedial change was brought about by the amendment in this subsection by the Finance Act, 1973, which restricted the period to a maximum of 15 months for which the aforesaid additional tax at the rate of 2% per mensem could be charged i.e, from the first date of April of the year in which the tax was paid up to 30th June of the next year following or up to the date of the regular assessm ent whichever was earlier."
12. ' In this connection, it would be advantageous to reproduce subsection (6) after the amendment. It reads as under: "(6) Where in any year an assessee has paid tax under subsection (2) or subsection (3) on the basis of his own estimate and the tax so paid is less than eighty per cent. Of the tax determined on the basis of the assessm ent under section 23, hereinafter called regular assessment, and calculated in the manner laid down in subsection (1) so far as such tax relates to income to which the provisions of subsections (2), (2A) and (2B) of section 18 do not apply an additional amount of tax at the rate of two per cent. Per mensem from the first day of April in the year in which the tax was paid up to thirtieth day of June of the year next following or up to the date of the said regular assessm ent whichever is earlier, shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent." (Underlining is ours).
13. ' The High Court went on to add: "In so far an assessm ent year 1973-74 and later years arc concerned, there is no dispute between the department and the respondents/assessees. For assessment year 1973-74 and subsequent years obviously the additional tax at the rate of 2% per mensem was limited to a maximum period of 15 months. The controversy is in relation to assessment year 1972-73 and earlier years where the assessm ent had not been fmalised inasmuch as either regular assessment had not been made by the Income Tax Officer or in case such assessment had been made, an appeal was pending or matter was still sub judice before the High Court in a reference under section 66 of the Income-tax Act, 1922."
14. ' The effect of the amendment, according to the High Court, was however confined only to cases which were still pending when the amendment was introduced in June, 1973. This position was clarified in the following words: "At this stage, it may be observed that, in so far as these cases are concerned where no proceedings were pending and finality had attached to the assessment orders, prior to coming into force of the amendment in subsection (6) of section 18-A of the Income-tax Act, 1922, by the Finance Act. 1973, no benefit can be taken due to the amendment."
15. ' And it went on to add that:- "In all the cases under consideration, the assessment proceedings against the respondents had not attained finality when the amendment in subsection (6) of section 18-A had been made by the Finance Act, 1973, as in all these cases either assessment had not been made by the I.TO. Or the matter was pending in appeal before the Tribunal."
16. ' Coming to the order of the Income Tax Tribunal, the Court said that it had "taken the view that the amendment made by the Finance Act, 1973 in subsection (6) of section 18-A has retrospective effect and as such additional tax under the said subsection could be charged for a maximum period of 15 months only."
17. Accordingly before the High Court, the question whether subsection (6) of section 18-A was substantive or procedural in nature was fiercely contested and the High Court after discussing the pros and cons thereof arrived at the conclusion that the provisions in subsection (6) of section 18-A were a part of the substantive law relating to the income-tax.
18. ' However, the High Court agreed with the submission of the respondents that the amendment in subsection (6) of section 18-A made by the Finance Act of 1973 was a remedial and curative legislation, designed to soften the harsh, unjust and unreasonable law, as then obtaining, whereby assessee could be charged additional tax up to the date of the assessment even though the finalisation of the assessm ent was delayed due to no fault of theirs.
19. Discussing the nature of the remedial statutes the High Court referred to Corpus Juris Secundum, Vol. 82 (paragraph 388), which, inter alia, is to the following effect: "In construing remedial statutes, regard should be had to the former law, the defects or evils to be cured or abolished, or the mischief to be remedied, and the remedy provided, and they should be interpreted liberally to embrace all cases within their scope so as to accomplish the object of the legislature and to give effect to the purpose of the statute by suppressing the mischief and advancing the remedy, provided it can be done by reasonable construction in furtherance of the object."
20. ' The question whether remedial statutes can be given retrospective effect has been considered by Crawford in his "Statutory Construction" (1940 Edn.) in para. 282 as follows: "282, Remedial statutes.---Even remedial statutes may be subject to the principles hereinto force discussed, opposing any construction which will give the enactment retrospective operation. Yet, since remedial statutes are usually looked upon with favour by the Courts, they should be liberally construed. But there appears to be considerable confusion in the cases with reference to giving remedial Acts retrospective effect through construction. If the rule of liberal construction is to be applied, as it obviously should then any doubt should be resolved in favour of retrospective operation, if such operation does not destroy or disturb vested rights, impair the obligations of contracts, create new liabilities violate due process of law or contravene some other Constitutional provision, and if such operation will carry out the intention of the legislature as ascertained through the application of the principle of liberal construction. In other words, a statute relating to remedial law may properly, in several instances, be given retrospective operation."
21. ' The conclusion arrived at by the High Court on this question was expressed in the following words: "In our view, as the amending provision under consideration had been inserted in subsection (6) of section 18-A to remedy a wrong that was being done to the assessee, and the amending provision does not affect any vested right or create any new obligations, the amending provision is to be given retrospective operation for extending benefit to the affected parties in pending cases, to give effect to the intent of the legislature. As observed earlier, a wrong was being done to the assessees by providing for an indefinite period during which they were made liable for payment of additional tax at the rate of 2% per mensem and this wrong was sought to be remedied by the remedial and curative amendment brought about by the Finance Act, 1973. If the intention of the Legislature had been that this remedy should be available only in respect of assessment for the year 1973-74 and subsequent years, the legislature would have used appropriate words to express such intention. No such appropriate words are mentioned in the amending provision. There is no reason why the remedial provision of the amending law should not be applied to pending proceedings. In fact, this appears to be the intent of legislature." .
22. While applying its dictum, the High Court, however, felt that the retrospective operation visualised by the instant amendment could extend only to such "cases which were pending at the time the amending law was enacted i.e, cases which had not been finally determined or proceedings which had not attained finality. The retrospective effect of the amending law would, therefore, apply only to those cases where assessm ent had not been made by the I.T.Os. Or where an appeal was pending before the Tribunal or a reference was sub judice before the High Court, at the time the amending law was enacted. The cases which had finally been determined or had attained finality i.e, which were past and closed transactions, could not be reopened under amending legislation as there are no express words to that effect employed in the amending law."
23. ' Accordingly the references were answered by the High Court in above terms.
24. ' In support of these appeals Mr. Sheikh Haider has submitted that the answer returned by the High Court is somewhat self-contradictory, in that the High Court while holding the amendment made to be a part of the substantive law relating to income-tax, had still given a retrospective effect to it, which was possible only if the amendment was found to be procedural in nature. It is further submitted that even if the amendment was remedial and curative in nature, retrospective effect could not be given to the said curative legislation.
25. However, nothing has been adduced before us in support of the last-mentioned submission. As explained in Crawford's "Statutory Construction" a statute relating to remedial law may properly, in several instances, be given retrospective operation and we are of the opinion that as the amendment in the instant case was introduced to redress an injury which in the words of Circular No,6 of 1973 (Income Tax) issued on 7th July, 1973 by the Central Board of Revenue itself was "designed to soften the law in favour of tax-payers who could previously be charged to additional tax up to the date of assessm ent even though the finalisation of assessment was delayed due to no fault of theirs." This was a proper case in which retrospective operation, to the extent the High Court gave to it, could be given to the amending law.
26. ' The upshot is that we find no merit in these appeals. They are, accordingly, dismissed. The parties are, however, left to bear their own costs.
27. ' At the conciasion of the hearing of these appeals, short order dismissing these appeals for reasons to be given later on was passed. The above are our reasons for the said short order.
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