NASIM SIKANDAR, J. - The Lahore Bench of the Income Tax Appellate Tribunal at the instance of the Commissioner of Income Tax Central Zone, Lahore has stated this case. The following question has been framed for our answer and reply:- "Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessm ents for 1971-72 to 1976-77 had become time-barred before coming into force of the Income Tax Ordinance, 1979."
2. The facts in brief are that the respondent is a public limited company and at the relevant time derived income from general insurance business. The original assessments in its receipt for the aforesaid six years were framed respectively on 3.5.1974, 30.6.1975, 31.5.1976, 31.5.1976, 31.5.1976 and 27.6.1977. However, the Assessing Officer after enforcement of the Income Tax Ordinance, 1979 issued Notice under Section 65 expressing his intention to re-open these assessments. Before the Tribunal it was contended that the period of limitation under which the cases could be reopened and re-assessm ent could be made under Section 34 of the Income Tax Act, 1922 was only two years from the end of the year in which the income was first assessable. The Tribunal agreed that for these assessm ent years re-assessments under Section 34 of the late Act could be made only before 30th June, 1979. Further it was found that extension in period by 10 years as provided for in Section 65 of the Income Tax Ordinance, at the relevant time, was not applicable as two years time limit under the late Act had already expired when the Ordinance was enforced on 1.7.1979.
3. After hearing the learned counsel for the parties, we will readily agree with the learned counsel for the respondent that an affirmative answer has to be returned. The issue if the extended time of limitation after enforcement of the Income Tax Ordinance under Section 65 could be made applicable to assessm ents in respect whereof the proceedings under Section 34 of the late Act had already become barred by limitation came up for hearing before a Division Bench of the Karachi High Court in re: New Jubilee Insurance Co. Ltd. v. Special Officer, Central Zone-A, Karachi and another (1990 PTD 1). Their Lordships expressed the view that after statutory period of two years from the end of the relevant assessm ent year as provided for under Section 34 of the Late Act, 1922 had expired, vested rights had been created in the assessee. Therefore, the time limitation of 10 year as envisaged under the corresponding provision of Section 65 of the Income Tax Ordinance, 1979 had no application. Learned counsel for the respondents has relied on a case from Indian Jurisdiction in re: J.P. Jami, ITO v. Induprasad Devshanker Bhatt (1969) 72 ITR 595. In that case the Hon'ble Court held that an Assessing Officer could not issue a notice under Section 148 of the Income Tax Act, 1961 in order to reopen the assessment of an assessee in a case where the right to reopen the assessm ent was barred under the 1922 Act at the date when the new Act came into force.
4. Learned counsel for the revenue has not denied that on the date of enforcement of the Income Tax Ordinance, 1979 on 1.7.1979 the right to reopen even the latest assessment framed for the year 1976-77 had become barred by limitation. Therefore, it was a past and closed transaction and the comparable provision of Section 65 of the Ordinance could not have been made resort to as the assessee had by that time acquired a vested right. All the more so when there was no provision in the Income Tax Ordinance, 1979 which could directly or by necessary implication indicate application of the provisions of Section 65 of the Ordinance to the time-barred cases under Section 34 of the late Act of 1922.
5. Therefore, being in respectful agreement with the view adopted by our learned brothers of the Karachi High Court and the Supreme Court of India we will hold that the Tribunal was right in cancelling assessm ents framed under Section 65 of the Income Tax Ordinance, 1979.
6. Re-assessm ents for the aforesaid assessment year when these had already become barred by time for the purpose of reopening as contemplated under Section 34 of the late Act, 1922 were rightly cancelled by the Tribunal.
7. Answered in the affirmative.