1. MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---In this reference application under section 136(2) of the Income Tax Ordinance, 1979, the following question has been proposed for our opinion: "Whether on facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was justified in directing to apply rule 207-A of the Income Tax Rules, 1982, in retrospection for the period wherein the necessary ingredient of the rule 207-A, i.e. Rates of the Collector, were not available?"
2. The relevant facts giving rise to this application are that the Respondent/Assessee, an individual, purchased a house, constructed on plot of land measuring 1600 square yards bearing No.2, Street- 24, Sector F-7/2, Islamabad, for the total consideration of Rs.35,22,500 on 28-3-1990. The Assessing Officer was of the opinion that the declared value of investment in the property was too low as compared to the other parallel cases and fair market value prevalent at the time of purchase. The Assessing Officer determined the reasonable value at Rs.75,00,000, deeming the difference of Rs.3,977,500, to be income under section 13(1) (d) of the Income Tax Ordinance, 1979.
3. The respondent preferred appeal before the learned CIT (A), who deleted the addition for the reason that there was no justification for estimating the value beyond the amount worked out on the basis of rates notified by the Collector or value adopted by the District Registrar for the purposes of stamp duty. The department filed second appeal before the I.T.A.T.
4. It was contended before I.T.A.T., on behalf of the Assessee/Respondent that provisions of rule 207-A of the Income Tax Rules are applicable to all such cases for the purposes of subsection (2) of section 13, of the Income Tax Ordinance, as the rule inserted by Notification, dated 25th July, 1997, has retrospective effect.
5. The learned Members of the Tribunal accepted the contention by placing reliance on the decision of Lahore High Court in the case of CIT v. Sarfraz Ali Sheikh 2000 PTD 374. The appeal at the instance of department was dismissed.
6. The department still felt aggrieved, but instead of filing a reference application under section 136(1) of the Income Tax Ordinance, submitted a rectification application under section 156 of the Income Tax Ordinance. The alleged mistakes sought to be rectified are reflected in the following passage of the rectification application: "In para. 5 of its order, dated 21-9-2000, the learned Income Tax Appellate Tribunal has referred to the remarks of learned cdunsel for assessee that rule 207-A of the Income Tax Rules, 1982, inserted vide Notification, dated 25-7-1997 has retrospective effect. However, the order of the learned Income Tax Appellate Tribunal does not contain any finding on this issue.
7. The learned Income Tax Appellate Tribunal, vide order, dated 21-9-2000, has relied upon the decision of Lahore High Court in the case cited as CIT v. Sarfraz Ali Shaikh 2000 PTD 374, for upholding the order of the learned Commissioner of Income Tax (Appeals). However, the aforesaid order of the Lahore High Court does not apply to the instant case as the same is based on the rates fixed by the District Collector for the purposes of stamp duty whereas no such rates were fixed for Islamabad for the period relevant to the assessment year 1990-91."
8. It was contended on behalf of department that a specific finding --be given regarding the retrospectivity of rule 207-A of Income Tax Rule, 1982, by re-calling the, earlier order. It was further pleaded that the decision of the Lahore High Court referred to in the order of Tribunal, dated 21-9- 2000 was not applicable.
9. On the other hand it was contended on behalf of the Assessee/Respondent that none of the rectification sought, fell within the purview of mistake apparent on record as envisaged under section 156 of the Income Tax Ordinance, which should be the mistake floating on the surface of the record. It was urged on behalf of the respondent that both the issues were duly considered and decided by the Tribunal and the Tribunal has no jurisdiction to review its finding, therefore, the rectification application was liable to be dismissed. Reliance was placed in this behalf on the judgment of Hon'ble Supreme Court of Pakistan in the case of CIT v. National Food Laboratories 1992. SCMR 687 = 1992 PTD 570.
10. The learned members of the I.T.A.T. Agreed with the contention of learned counsel for the respondent and held that the alleged mistake cannot be rectified under section 156 of the Income Tax Ordinance.
11. The rectification application was dismissed accordingly. Thereafter, the department submitted a reference application before the Tribunal under section 136(1) of the Income Tax Ordinance, 1979, praying that the question reproduced in the earlier part of this judgment be referred to the High Court for opinion. It was alleged that the said question of law arises out of the order of I.T.A.T. Since the reference application under section 136(1) of the Income Tax Ordinance was filed with reference to the order, dated 26-1-2001 in Rectification Application No.239/KB of 2000-2001, therefore, the learned Members of the Tribunal after examining the entire facts and circumstances held that the question proposed for reference to High Court does not arise out of the order of Tribunal relating to the rejection of the rectification application, therefore, it does not arise out of the said order and consequently the reference application was rejected. After the rejection of application by the.
12. Tribunal under section 136(1) of the Income Tax Ordinance, 1979, the department has filed this reference application directly under section 136(2) of the Income Tax Ordinance; 1979.
13. We have heard Mr. Aqeel Ahmed Abbasi, learned counsel for the appellant.
14. Mr. Aqeel Ahmed Abbasi, learned counsel for the appellant has submitted that reference application lies in respect of a question of law arising out of an order under section 156 of the Income Tax Ordinance, 1979. In support of his contention he has placed reliance on the judgments in the following cases:
(1) The Commissioner of Income Tax v. Messrs Adam Ltd. PLD 1969 Karachi 300;.
(2) Hasan Ali Karabhai v. Commissioner of Income Tax PLD 1974 Karachi 473;
(3) Imperial Chemical Industries v. Commissioner of Income-tax 1979 116 ITR 516 (Calcutta High Court) and
(4) Messrs Pakistan Electric Fittings Manufacturing Co. Ltd. Commissioner of Income Tax 2000 PTD 2407.
15. In the last judgment, three earlier judgments have been 'considered. The ratio of all the above judgments is that an order under! section 156 partakes the character of original order which is rectified under section 156 of the Income Tax Ordinance. Thus, if an order under section 62 of the Income Tax Ordinance is rectified under section 156, it assumes the character of order under section 62 of the Income Tax Ordinance, and an appeal from the order under section 156 shall lie in the same manner as from an order under section 62. Likewise, if the first or the second appellate orders under section 132 or 135 of the Income Tax Ordinance, are rectified under section 156, the rectified orders are to be read as orders under section 132 read with section 156 and order under section 135 read with section 156 of the Income Tax Ordinance, respectively.
16. By the above judgments, it stands settled that an order under section 156 shall have the same character and be deemed to be under the same section of the Income Tax Ordinance, under which it was originally made and was rectified by recourse to section 156 of the Income Tax Ordinance.
17. Thus, if the Income-tax Appellate Tribunal has rectified an order under section 156, it shall also be deemed to be an order under section 135 of the Income Tax Ordinance and reference pertaining to any questions of law arising out of order under section 156 of the Income Tax Ordinance, shall lie in the same manner as out of an order under section 135 of the Income Tax Ordinance.
18. However, the above proposition of law is of no help to the appellant in the present -case. The reason being that admittedly the question of law proposed in the reference application arises out of the original order by the Tribunal is I.T.A. No.562/KB of 1993-94, dated 21-9-2000 and not from the order, dated 26-1-2001 in M.A. (Rect) No.239/KB of 2000-2001 made under section 156 of the Income Tax Ordinance, No reference application was filed against the order, dated 21-9-2001 passed under section 135 of the Income Tax Ordinance, and in the order, dated 26-1-2001 disposing of the application under section 156 of the Income Tax Ordinance the learned Members of the Tribunal made no rectification in respect of issues under consideration and held that in the facts and circumstances of the case the provisions of section 156 of the Ordinance cannot be invoked. In these circumstances the learned Members of the Tribunal while rejecting the reference application under section 136 (1) of the Income Tax Ordinance, held that the question of law proposed in the reference application, does not arise out of the order rejecting the rectification application, against which the reference application was filed. Mr. Aqeel Ahmed Abbasi, is not able to point out any infirmity in the order, dated 27-4-2001, rejecting the Reference Application No.227/10 of 2000-2001, submitted under section 136(1) of the Income Tax Ordinance. We are, of the considered opinion, that merely because a reference application lies against an order under section 156 of the Income Tax Ordinance, nobody can be allowed to circumvent the law relating to the period of limitation provided in B subsection (1) of section 136 and in subsection (2) of section 136 of the Income Tax Ordinance, 1979. The effect of treating the order under section 156 made by the Tribunal under section 135, is that, for the c purpose of making reference to High Court, it shall be treated as an order under section 135 of the Income Tax Ordinance. Nonetheless, a party cannot be allowed to seek a reference to the High Court in respect of question of law arising out of the original order under section 135 of the Income Tax Ordinance, if no such application was submitted within a D period of ninety days of the date upon which he is served with the notice of an order under section 135 of the Income Tax Ordinance, as provided under section 136(1) of the Income Tax Ordinance, in the garb of an order under section 156 of the Income Tax Ordinance, 1979. We would like to clarify that orders under section 135 and section 156 made by the I.T.A.T. Are subject to reference to the High Court, but the period of limitation for making reference from the each order would be the same as provided in subsection (1) of section 136 of the Income Tax Ordinance. If any reference application is sought to be made in respect of an order under section 156 of the Income Tax Ordinance, then the reference shall lie, if the question of law arise out of the order under section 156 only and not otherwise. If any question of law arises out of order under section 135 of the Income Tax Ordinance, then it cannot be referred to the High Court with reference to the order under section 156, if the period of limitation has expired. In the present case, we find, that the original order by the Tribunal under section 135 of the Income Tax Ordinance, was made on 21-9-2000 and no reference application was filed in respect of any question of law arising out of the said order.
19. The applicant instead, chose to filed rectification application which was F rejected on 26-1-2001.
20. Thus the only question which could arise out of the order of Tribunal under section 156 was whether Income Tax Appellate Tribunal was justified in rejecting the rectification application. This question has not been proposed in the present reference application and instead the question has been proposed which arises out of the order of Tribunal, dated 21-9-2000, which has become barred by time.
21. In the case of Messrs Pakistan Electric Fittings Manufacturing Co. Ltd. v. Commissioner of Income Tax 2000 PTD 2407, on which Mr. Aqeel Ahmed Abbasi has placed reliance, the question was proposed, "whether the orders of the I.T.A.T. And the Income Tax Authorities suffer from many mistakes apparent on the face of record"?
22. After holding that the order of I.T.A.T. Rejecting the application under section 156 was subject to appeal to the High Court, (at the relevant time the appeal was provided instead of reference application), the question reproduced was entertained.
23. Mr. Aqeel Ahmed Abbasi, learned counsel for the applicant has conceded that in the present reference application the question which has been proposed arises out of the order of Tribunal under section 135 of the Income Tax Ordinance, 1979, dated 21-9-2000 and not from the order of Tribunal rejecting the rectification application under section 156 on 26-1-2001.
24. In the above circumstances, it is held that the I.T.A.T. Rightly rejected the reference application under section 136(1) of the Income Tax Ordinance, 1979 to which no exception can be taken. In the facts and circumstances of the case the reference application is not maintainable which stands dismissed in limine. .