JUDGEMENT: MALIK MUHAMMAD QAYYUM, J.--1. This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 calls in question a notice issued by the Inspecting Assistant Commissioner, Income Tax, Range III Zone-A, Lahore on 15th April, 1992 under Section 66-A of the Income Tax Ordinance, 1979, calling upon the petitioner to show-cause as to why assessment of her income made under Sections 62/135 of the Income Tax Ordinance, 1979 on 8th February, 1992 be not cancelled and fresh order be not passed.
2. The petitioner, who is a film artiste, filed her return for the assessment year 1985-86, declaring her assessable income at Rs. 2,16,000/-. The Income Tax Officer did not accept the assessment under the Self-Assessm ent Scheme. He instead proceeded under the . Normal law and by his order dated 10th March, 1985 assessed her income at Rs. 9,02,450/-.
3. Aggrieved by that order, the petitioner filed an appeal which was accepted by the Commissioner of Income Tax (Appeals) on It November, 1986 who reduced the assessed income to Rs. 7,30,250/-.
Still feeling dissatisfied, the petitioner went in second appeal to the Income Tax Appellate Tribunal which accepted it on 28th January, 1991. It was, however, observed by the Tribunal that the return of the petitioner qualified for acceptance under the Self-Assessment Scheme; the Income Tax Officer was not justified in assessing her under the normal law. It consequently directed the ITO "to accept the return in immunity if all the conditions for that are fulfilled". It was further observed that "subsequent action, if any, under. Section 65 be taken, if so allowed under the law and supported by the facts of the case".
This order of the Appellate Tribunal was given effect to by the Income Tax Officer on 8th February, 1992 when he accepted the return of the petitioner under the Self-Assessment Scheme. However, no notice under Section 65 of the Income Tax Ordinance, 1979 has been issued to the petitioner till today but instead the impugned notice which purports to be under Section 66-A of the Income Tax Ordinance, 1979 dated 5th April, 1992 has been served upon the petitioner by inspecting Assistant Commissioner (respondent No. 1 herein).
4. In support of this petition, learned counsel for the petitioner has urged that the issuance of notice under Section 66-A and assumption of jurisdiction by the Inspecting Assistant Commissioner of the Income Tax is wholly without jurisdiction as for the assessment year in question the final order is that of the Income Tax Appellate Tribunal and not the Income Tax Officer. Reliance has been placed on Glaxo Laboratories Ltd. Vs: Inspecting Assistant Commissioner of Income Tax (1992) 66 Tax 74 (SC Pakistan) and others and Mrs. Anjuman Shaheen Vs: Inspecting Assistant Commissioner of Income Tax, Range III, Zone-A, Lahore [ (W.P. No. 999 of 1992)].
5. The other contention raised by the learned counsel for the petitioner is that the impugned notice is based on the assumption that an order of assessment under Sections 62/135 of the Income Tax Ordinance, 1979 was passed by the Income Tax Officer on 8th February, 1992 which is factually incorrect as no Older of assessm ent was made by the Income Tax Officer On that date but he had just given effect to the order of Tribunal.
6. Ch. Muhammad Ishaque, learned counsel for the respondents had, on the other had, argued that Section 66-A as stands today authorises the Inspecting Assistant Commissioner of Income Tax to issue notice if he is of the view that the order of assessment passed by the Income Tax Officer or in appeal by the Appellate Authority is erroneous or prejudicial to the interest of public revenue. As regards the contention of the learned counsel for the petitioner, learned counsel for the respondents states that it is correct that there is no formal order of assessment made by the Income Tax Officer under Section 62/135 of the Income Tax Ordinance 1979 on 8th February, 1992; but an order giving effect to the order of the Tribunal was made.
7. As regards the power of Inspecting Assistant Commissioner, it is not disputed by the learned counsel for the respondents that Section 66-A as originally enacted authorised Inspecting Assistant Commissioner to revise an order passed by an Income Tax Officer subject to certain conditions but there was no such power with respect to orders passed in appeal or revision.
However, by an amendment inserted by the Finance Act, 1991 this power was made available with regard to the appellate orders as well. In the present case, dispute relates to the assessment year 1985-86; the amendment in Section 66-A in 1990 being not retrospective in character has no application to this case.
8. As regards the interpretation of Section 66-A as originally enacted, the matter stands concluded by the pronouncement of Supreme Court of Pakistan in the aforesaid case of Glaxo Laboratories wherein it has been laid down that where an appeal is filed against the orders of the Income Tax Officer, the original order ceases to exist and stands merged in the appellate order which alone remains in the field and Section 66-A as originally enacted could not be invoked by the Inspecting Assistant Commissioner.
9. It is to be seen that no formal order of assessment was made by the Income Tax Officer on 8th February, 1992 when he only gave effect to the order of Income Tax Appellate Tribunal. The order passed on 8th February, 1992 cannot be considered to be an order of assessment under Section 62 of the Income Tax Ordinance, 1979. The final order of assessment in this case is that of the Income Tax Appellate dated 28th January, 1992. The cases of Commissioner of Income Tax, Madras Vs: Mst.
Ar. S. Ar. Arunachalam Chettiar (1953, 23ITR-180/188/189) and Commissioner of Income Tax, Karachi Vs: Malik Walayat Hussain & Sons Ltd., Quetta (1976 33 Tax 285 Karachi) support this view.
10. It is also to be noticed that in the present case, the Income Tax Appellate Tribunal vide its order dated 28th January, 1991 had allowed respondents to initiate proceedings under Section 65 of the1 Income Tax Ordinance, 1979, if permitted to do so by law. It is unfortunate that respondent No. 1, instead of resorting to that provisions, chose to issue a notice U/S 66-A of the Income Tax Ordinance, 1979 which in the circumstances of the case has no application.
In view of what has been stated above, this petition is allowed and impugned notice and proceedings in pursuance thereof are declared to be without lawful authority and of no legal effect. This order shall not be construed as preventing the respondents from proceeding under Section 65 of the Income Tax Ordinance, 1979, if it is otherwise permissible and justified.
There is into order as to costs. Reported as PTCL 1993 CL. 641.