NASIM SIKANDAR, J.---This is a case stated by the Lahore Bench of the Income-tax Appellate Tribunal under section 136 (1) of the Income Tax Ordinance, 1979. Following question of law has been referred by the Tribunal at the instance of C.I.T. Companies, Lahore:- "Whether in the facts and circumstances of this case, the Tribunal was justified in holding that the learned I.A.C. Fell in error in assuming under section 66-A of the Ordinance and in holding that the assessm ent made by the I.T.O. Under sections 132/62 of the Ordinance on 24-2-1985 was just compliance of the order of the learned CIT (A) and was neither erroneous nor prejudicial to the interest of revenue?"
2. The facts in brief are that the assessee a public company, for the assessment year 1980-81 returned an income of Rs. 2,33,64,938 under Self-Assessment Scheme. The Assessing Officer, however, framed assessm ent at Rs.2,49,80,245. In the process, a sum of Rs.18,86,102 was added as income by resort to provisions of section 12 (7) of the Ordinance. Earlier it was noted that two loans of Rs.79,72,164 and Rs.55,00,000 having been made to Ujala Cotton Mills without charge of interest attracted the aforesaid deeming provisions . The learned First Appellate Authority (Appeals) Zone-I, Lahore, however, set aside the addition so made with the following observation:--- "On factual plane, it is pointed out by the learned counsel that the said amount of Rs.55,00,000 did not constitute any loan and in fact was a deposit for acquisition of the share capital of the subsidiary Company. About the second amount of Rs.79,72,164 it is pointed out that the same was advanced to the subsidiary company for erection of the mills and not for carrying on the business and as such no interest could be charged on both the amounts. It is clear that th Income Tax Officer did not ascertain the facts of the case. He co call for the details of both the amounts and still complete th assessm ent under section 59 under the Self-Assessment procedure. The Income-tax Officer is accordingly directed to call for and examine the details of the two amounts and revise his orders, if necessary."
3. After remand, the Assessing Officer on 24-2-1985 accepted the declared version and deleted the aforesaid addition made by referring to C.B.R. Circular No. S.R.O. 750 (1)/79, dated 23-8-1979.
4. Thereafter, the concerned I.A.C. Proceeded to exercise his power vested in him under section 66- A on the ground that at the time of reassessment, the Assessing Officer failed to probe into the facts of case and accepted the explanation put forth in toto without proper application of mind. In the view of the learned I.A.C. The provisions of section 12 (7) were clearly attracted to the loan of Rs.79,72,164. The other amount of Rs.55,00,000 was, however, found to have been advanced for purchase of shares which were actually issued in due course.
5 In the appeal before the Tribunal, the exercise of powers by the I.A.C. Under section 66-A was disapproved. It was noted that the I.T.O. After remand, properly probed the claim and accepted the contention of the assessee which was supported by a certificate of Messrs Ujala Mills Limited stating that the loan of Rs.79,72,164 was advanced by the assessee company for acquiring capital assets and errection of Mills. Further, that the loan was not used for business purpose, acquisition of shares, debentures or securities etc. Which were conditions precedent for application of provisions of section 12(7) of the Ordinance. Last according to the learned Tribunal, the re-assessm ent made by the I.T.O. Under sections 132/62 of the Ordinance was just compliance of the order of the First Appellate Authority. The I.T.O. Complied with the direction given in the appellate order and after perusal of evidence held that interest under section 12 (7) of the Ordinance was not chargeable." Therefore, in the view of the Tribunal, the learned LA.C. Clearly fell in error in assuming jurisdiction under section 66-A of the Ordinance as the re-assessment made by the I.T.O. On 24-2-1985 was neither erroneous for prejudicial to the interest of revenue.
6 Heard the learned counsel for the parties.
7 The learned counsel for the respondent has attempted to argue the case on merits. By referring to the aforesaid C.B.R. Circular dated 7-11-1979, he claims that the provisions of section 12 (7) of the Income Tax Ordinance were not attracted to the facts in hind. Also relies upon (1979)
120 I.T.R. 872 re: Surrendra Overseas Ltd v. C.I.T. West Bengal PLD 1973 SC 144 re: Dr. Habibur Rehman v. The West Pakistan Public Service Commission, Lahore and 4 others, 1996 PTD 1136 re: Commissioner of Income-tax, Zone-A, Lahore v. Malik Bashir Ahmad and PLD 1966 SC 828 re: Muhammadi Steamship Company Limited v. Commissioner of Income-tax (Central), Karachi to contend that the aforesaid amounts to the sister concern could not be treated as loans or advances and that the Assessing Officer having merely complied with the direction of the First Appellate Authority the re-assessme nt order so made could not be held to be erroneous and prejudicial to the interest of the Revenue.
8 The learned counsel for the Revenue, however, states and we will agree that the question as referred to us does not pertain to the facts of the case. It revolves only around the issue if the re- assessm ent made after remand was mere compliance of the direction of the Appellate Authority and, therefore, could not be a subject-matter of revisional jurisdiction of the I.A.C. Under section 66-A of the Ordinance. It is an admitted position that against the order of C.I.T. (Appeals) the assessee approached the Tribunal to assail the remand order. However, that appeal was withdrawn when the Assessing Officer accepted their version. It goes without saying that a direction carried out by the Assessing Officer contained in an appellate order cannot be a subject- matter of exercise of revisional jurisdiction of an I.A.C. However, where the Appellate Authority does not give a precise direction to do particular act, the reassessment so framed cannot be said to be a mere compliance of the appellate order under section 132 of the Income Tax Ordinance. Were the scope of inquiry, to be made after remand remains open, the assessment so framed or at least that portion of the assessm ent order will amount to fresh assessment and will be revisable under section 66A by the concerned 9 We have earlier reproduced the portion of the order of C.I.T.
(Appeals) whereby he had remanded the matter with regard to application of the provisions of the section 12(7) of the Ordinance. It clearly shows that C.I.T. (Appeals) did not make a direction to accept or reject the claim of the assessee. The Appellate Authority after finding that the Assessing Officer had not ascertained the facts of the case, set aside that portion of the assessment order and directed him "to call for and examine the details of the two amounts and revise his orders, if necessary". The remand so directed did not oblige the Assessing Officer to either record a specific finding, or to merely calculate income expenditure or the amount of tax. The contention of the assessee would have been justified if the C.I.T. Appeals had maintained in principle the reasons on the basis of which, the addition was made. In such situation, the remand would have only been to calculate either the income or the tax assessable. The Commissioner of Appeals found that the inquiries made while making the addition were inadequate and, therefore, directed the Assessing Officer to make further inquiry. The result of that inquiry was neither contemplated nor suggested.
That being so, the acceptance of the nature of advance and the purpose for which it was made, was a fresh order and accordingly reviseable by the I.A.C. We will also hold that having filed an appeal against the order of the First Appellate Authority, the assessee was rather estopped from taking the plea that the assessm ent framed on remand was mere compliance of the appellate order. Had the direction been to accept the claim of the assessee directly or indirectly, the assessee would not have gone in appeal. Any assessment order made after remand on the basis of an inquiry and the conclusions drawn therefrom cannot be said to have been a mere compliance of the appellate order. There appears to be a general misconception amongst some of the Assessing Officers. In cases of remand they frame assessment orders by reference to the provisions of section 132. The mentioning of the provisions of section 132 alongwith section 62 of the Income Tax Ordinance is legally incorrect. The provisions of section 132 are independent of section
62. Once a decision has been made in appeal, in view of doctrine of merger, the assessment order merges in the appellate order. In both cases of total or partial remand of issues, the assessment has to be made under section 62 of the Ordinance without reference to the provisions of section
132. An open-ended remand either requiring a further inquiry or reappraisal of the facts already disclosed or the material available on record, is fresh assessment order in all respects and, therefore, is subject to the provisions of the Ordinance regarding appeals, revision; rectification etc. One simple test can also be laid down. It is that on framing of reassessment order if an assessee can file an appeal against the order so framed the provisions of section 66A will also be attracted.
On the other hand, if the remand is with a specific direction to be carried out then it would merely be a ministerial act on the part of the Assessing Officer and therefore, would neither be open to appeal nor be subject to the revisional jurisdiction of an I.A.C. In such cases it is only the order of the Appellate Authority determining the issues on the basis of which direction to be carried out by the Assessing Officer was made which is assailable by the assessee as well as the Revenue before the Tribunal.
10 In the present case, since the remand order was open-ended for resolution of a dispute on the basis of an inquiry, the order made on reassessment was as much revisable as.It was appealable.
11. Since as observed earlier, the question framed for our answer does not relate to the facts or other merits of the case, the judgments relied upon by the learned counsel for the respondent assessee are not relevant and do no' call for any discussion.