NASEEM SIKANDAR, J.---In this further appeal under section 136 of the Income Tax Ordinance, 1979 (since amended by Finance Act, 2000) following questions of law are stated to have arisen out of three orders of the learned Income Tax Appellate Tribunal recorded respectively on 21-3-1998, 20- 3-1998 and 25-6-1998.
QUESTIONS:
(i) Whether on the facts and circumstances of the case the Tribunal has erred in law by refusing to recall its order dated 21-3-1998 in I.T.As. Nos. 80 to 87/LB of 1998 for assessment years 1988-89 to 1995-96?
(ii) Whether on the facts and in circumstances of the case the Tribunal has erred in law in refusing to constitute a larger bench to consider the points of law involved in the appeals?
(iii) Whether on the facts and in circumstances of the case the Tribunal has erred in law in not ordering acceptance of sales declared by the appellant on the basis of Excise record?
(iv) Whether on the facts and circumstances of the case the Tribunal has erred in law in not disapproving the formula applied by the I.T.O. For the estimate of sales which kind of formula had been disapproved by the Lahore High Court Lahore?
2. The appellant is an assessee of the Income Tax Department. Against the order of Commissioner (Appeals) the assessee approached the learned Tribunal complaining against the first appellate order recorded for the assessm ent years 1988-89 to 1995-96 while the department assailed the orders for the assessm ent years 1988-89, 1989-90, 1991-92, 1992-93 and 1994-95. The cross appeals were heard by a Division Bench of the Tribunal on 23-12-1997 and decided on 21-3-1998. The appeals filed by the assessee were rejected while the departmental appeals as a consequence thereof were found, to have become infructuous and, therefore, dismissed as such.
3. During this period the assessee made an application for constitution of a Full Bench. It was heard and decided by the then Chairman on judicial side. The prayer of the assessee/present appellant was rejected after noting that the appeals having already been heard by a Division Bench, the judgment was not being announced in view of the pendency of that application for constitution of a Full Bench. After rejection of that application on 20-3-1998, the appellant again made an application to recall the order recorded in the meanwhile on appeals on 21-3-1998, as also rehearing by a Full Bunch or another Division Bench. That application was heard ex parte on 5-6- 1998 and rejected on 25-6-1998. The learned Members of the Tribunal concluded that the provisions of section 156 of the Income Tax Ordinance providing for rectification of mistakes were not attracted to the facts in hand. Thereafter, on 13-8-1998 the appellant filed this appeal proposing the aforesaid questions.
4. The Revenue has raised a preliminary objection against maintainability of this appeal on the ground of its being hopelessly barred by time. Learned counsel for the Revenue contends that under the appeal provisions of section 16 which existed at the relevant time the appellant could approach this Court within sixty (60) days of the date upon which it was served that an order of the Tribunal recorded under section 135 of the Income Tax Ordinance. According to the learned counsel the only order which could possibly be assailed was the one recorded under section 135 which happened on 21-3-1998 and rest of the two orders passed on different applications recorded by the Tribunal cannot be a subject matter of appellate jurisdiction of this Court. Lastly refers to a judgment of this Court in re. Iram Ghee Mills limited v. Income Appellate Tribunal (1998 PTD 3835) to emphasise that the appeal provisions under section 136 which remained inforce from 1-7-1997 to 30-6-2000 did not really change the reference jurisdiction-being exercised by this Court earlier to the amendment.
5. Learned counsel for the assessee/appellant, however, places reliance upon a recent judgment of the Karachi High Court re. Messrs Pakistan Electric Fittings Manufacturing Co. Limited v. Commissioner of Income Tax and two others (2000 PTD 2407) to claim that the last order of the Tribunal recorded on 25-6-1998 under section 156 having merged with the first order recorded on 23-3-1998, this appeal is well within the prescribed limitation of sixty (60) days.
6. After hearing the learned counsel for the parties we are inclined to sustain the objection made by the Revenue. Learned counsel for the Revenue is correct in pointing out that the nature of jurisdiction of this Court under section 136 remains the same both before the amendment by Finance Act, 1997 and on the restoration of previous provisions by Finance Act, 2000. Under the provisions of section 136 of the Income Tax Ordinance, earlier to their amendment in 1997 an assessee or the Commissioner could make an application before the Tribunal for 'reference to the Court of a question of law which had arisen out of the order of the Tribunal recorded under section 135 of the Income Tax Ordinance. That situation did not change even in appeal provisions which, in.Similar terms provided an appeal to this Court; "in respect of any question of law arising out of an order under section 135".
7. Section 135 provides for disposal of appeals by the Appellate Tribunal. It states that if the Appellate Tribunal is not satisfied that the assessment or the order which is the subject of the appeal ought to be interfered with, it shall reject the appeal. Also that on satisfaction that an assessm ent which is subject of appeal ought to be reduced or annulled, it shall reduce or annul the assessm ent accordingly. In case the assessment is found to be insufficient the Tribunal is competent to enhance the assessm ent. Further, it can set aside the .Assessment with a direction to the Assessing Officer to make a fresh. In case the Tribunal is satisfied that an order which is subject-matter of appeal ought to be interfered with, it is competent to cancel or very the order and can issue consequential directions.
8. The Tribunal once having exercised jurisdiction under section 135 is certainly competent to rectify its order under section 156 within the prescribed limitation of four years from the date of he order.
The rectification of mistake can be made at the instance of the assessee as well as the Revenue.
However, the resulting order would not have similar effect in law. In case a rectification order either by the assessee or the revenue is refused, the order recorded ,by the Tribunal under section 135 remains intact in all respects and the order refusing to rectify the same will stand alone. It does not in any manner either merges in the original order of the Tribunal recorded under section 135 or otherwise can be taken to be a part of it at least for the purpose of reference or appeal to this Court.
9. The submissions made in support of the competency of appeal are based upon the aforesaid judgment of the Hon'ble Karachi High Court that an order made on an application for rectification merges with the original order by the Tribunal and, therefore, can be taken to be an order recorded under section 135 read with section 156 to make an appeal competent before this Court. With utmost respect for our learned brothers we are not persuaded to agree. The second facet of the argument that even an order refusing rectification under section 156 merges with the order recorded under section 135 and, therefore, becomes appealable or can give-rise to a question of law referable to this Court .Does not appear to be a correct statement of law. In the first place the doctrine of "merger" as explained by the Karachi High Court in re. Glaxo Laboratories (Pakistan)
Limited v. Inspecting Assistant Commissioner of Income Tax and four others (1992 PTD 82) and maintained by the Hon'ble Supreme Court of Pakistan in re. Glaxo Laboratories Limited v. Inspecting Assistant Commissioner of Income Tax and others, (1992 PI D 932) is not attracted to such situation.
The doctrine or the principle that the original order merges in the appellate order is not relevant in a case where Income Tax Authorities or the Tribunal refuses to rectify the mistake when approached under section 156. Evenas a general proposition the order amended by Income Tax Authorities or the Tribunal cannot be said to have merged with the previous order for the simple reason that doctrine of "merger" only forestalls an inteference by a lower forum after that order had gone through the mill of a higher or appellate forum.
10. Learned counsel for the appellant has also made a reference to the three reported judgments earlier considered by their lordships of the Karachi High Court in re. Messrs Pakistan Electirc Co.
(Supra). These cases are re. Karsan Das Bhagwan Das Patel v. G.V. Shah Income Tax Officer (1975)
98 ITR 273 (Guj.) re. S. Snakappa v. Income Tax Officer (1968) 68 ITR 760 (SC) and re. Mandal Ginning and Pressing Co. Limited v. Commissioner of Income Tax (1973) 90 ITR 332 (Guj.). However, .Again with utmost respect we are not able to find the ratio settled in these cases to support the proposition advanced by the learned counsel for the petitioner that an order to refuse rectification becomes a. Part of the order sought to be rectified and, therefore, can be read as its part.
11. The law in this regard is consistent since the enforcement of the late Act of 1922 when, prior to the establishment of the institution of the Tribunal a reference to this Court was to be made by a Commissioner of Income Tax on a question of law under section 66 which arose out of an order of Appellate Assistant Commissioner recorded in appeal under section 31 of that Act. In re. Srimathi Chanan Devi (1944) 12 ITR 153. Din Muhammad, J. Explained the concept while refusing to answer all the three questions as framed and referred by the Commissioner of Income Tax, Punjab under section 66(2) of the Act. He observed that a question which an assessee could ask to be referred to the High Court was confined only to the one which arose out of an order under section 31 and that the question referred by the Commissioner could not travel beyond the order recorded under that section.
12. In our view the provisions of section 136 both before and after the amendment in the year, 1997 and then in the year 2000 are sufficiently clear to reject the contention of the learned counsel. The provisions of section 136 continue to make a specific reference to the order of the Tribunal under section 135 which could possibly give rise to a question of law to 'the appellate jurisdiction of this Court. By making a specific reference to section 135 the Legislature has clearly restricted the scope of appeal or reference Only to the questions of law which arise out of that order and none else. As noted earlier the Tribunal is competent to rectify its order under section 156 in exercise of that jurisdiction. However, it is only an order recorded on a successful application for rectification which can be read to be a part of the original order and covered by the provisions of section 135 if it goes to change the same to the prejudice of either the assessee or the Revenue. If an order on the application under section 156 simply refuses to rectify the original order, as observed earlier, it stands alone Ind remains a different order independent of the one originally recorded under section 135 of the Ordinance. Even where the Tribunal acts suo motu and rectifies the original order but such rectification does not change the order under section '135 to the prejudice of any of the parties, again such an order stands on its own and does not enter into the original order to give rise to a question of law to be considered by this Court. The order of rectification can be read as part of the rectified order and, therefore, subject to appellate or reference jurisdiction of this Court only if the change resulting therefrom disturbs the existing situation of liability of the assessee or the entitlement of the Revenue.
13. There are three conditions to be kept in mind while considering if a question of law arising out of an order of Tribunal under section 135 can be a subject-matter of the appeal or referable jurisdiction of this Court. The first is that the question must be that of law. Secondly, that it arises out of the order of the Tribunal and thirdly, that the order of the Tribunal giving rise to such question of law was recorded under section 135 of the Income Tax Ordinance. To this list another condition can also be added. It is that where an order recorded under section 135 is rectified by the Tribunal to the prejudice of either the assessee or the Revenue, be it on the application of any of them or suo motu, it will be taken to be a part of the rectified order only if it operates to the prejudice of either the assessee or the Revenue. In re: Commissioner of Income Tax, Central Zone, Lahore v. Gauhar Ayyub (1995 PTD 1074), this Court reiterated the principle that this Court could deal with a question of law only if it had arisen out of the order of the Tribunal passed under section 34 of the late Income-tax Act, 1922. The Hon'ble Supreme Court of Pakistan in re: Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. Commissioner. Of Income Tax, South Zone, Karachi (1982 SCM R 489) dissented from the ratio settled by them in re. Hanza Asian Textile & Woollen Mills Ltd. Saidpur Road, Rawalpindi v.
Commissioner of Sales Tax, Rawalpindi Zone, Rawalpindi (1973 PTD 544) and re. Walayat Flour Mills, Lyallpur v. Commissioner of Income Tax. Rawalpindi (1973 PTD 530). In both the above cited cases the appex Court had favoured extended interpretion of law while considering if a question did arise out of the order of the Tribunal, However, in the earlier cited case re. Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. Commissioner of Income Tax, South Zone Karachi (supra) their lordships concluded that there was preponderance of view that the expression "arising out of such order" in section 66(i) of the Income Tax Act did not include within its concept .a question of law which was not raised, argued or decided by the Tribunal. The Delhi High Court in re. Birla Cotton, Spinning and Weaving Mills Limited v. Commissioner of Income Tax, Rajasthan (1980) 123 ITR 354 had another angle to consider. According to them where an appeal before the Tribunal was not competent on an issue of jurisdiction, a reference to High Court arising out of that order will also not be competent.
14. If the interpretation of the appellant/assessee is accepted then we will have to read so many provisions together. For example, the period of sixty days provided for appeal under section 136 at the relevant time will have to be read with the provisions of section 156 of the Income Tax Ordinance which in turn provides for a limitation of four years.. An assessee or revenue can conveniently make an application pleading any conceivable ground to seek rectification of the order and on the rejection of such application can approach this Court by trampling the para meters provided for appeal (or reference) to this Court. The fixation of time to bring appeal or to make reference being one of the important para 'meters. Where a right of appeal or reference is provided with reference to a specific provision of law as in the present case an appeal is maintainable only with reference to an order recorded under that section H alone. The scope of right necessarily stands restricted to that provision and none-else. An appeal under section 136 of the Ordinance at the relevant time as held by this Court in re. Tram Ghee Mills Limited, (supra) was in fact a reference and, therefore, needed to be dealt with as such. It goes without saying that the reference jurisdiction of this Court is different from its appellate and revisional jurisdiction under Civil Procedure Code, Criminal Procedure Code or similar other laws. The essence of advisory or reference jurisdiction under section 1.36 after the aforesaid amendment is necessarily restricted to the questions of law which were either pleaded, argued and decided by the Tribunal or which arose as a natural consequence of that order. If on rectification the rectified order of the Tribunal proceeds to the prejudice of the interest of any of the parties, the assessee or the revenue, an appeal would be J competent not by reading together the provisions of sections 156 and 135 but under section 135 alone as being part of the order made at a subsequent stage.
15. An order recorded under section 135 is "rectified" only if an actual modification or rectification is made therein. If no rectification is made and the prayer for rectification is refused then the order under section 135 already recorded stands intact. The refusal cannot, by any Tule of interpretation be read as a part of the original order. An order by which an interference, rectification, correction or amendment in the original order is refused has no legal or factual nexus to become part thereof to give rise to a question to be considered in reference. For, similar reasons in case of an unsuccessful application for rectification this Court will never entertain the issue as a question of law if the Tribunal was justified in refusing to rectify an order under section 135.
16. In our view there is neither an authority under the Income Tax Ordinance nor any pronouncement by a superior Court in the Sub-Continent under the late Act of 1922 which goes to support the proposition that a question of law arises from an original order of the Tribunal reading with the one through which any amendment, rectification or correction was refused by it. However, as noted earlier if a rectification, amendment, correction or other interference has been made in the order recorded under section 135 which goes to the prejudice of any of the parties, then obviously a fresh cause as well as period of limitation will start from the date when such addition, amendment, rectification or correction was made. An unsuccessful application for rectification can never give rise to either a fresh cause of action or to a question of law giving new lease of life to the order which had become barred by limitation. A successful application for rectification or suo Motu exercise of the Tribunal which goes to add 'excise or amend the order of the Tribunal earlier recorded under section 135 becomes the part of that order to be read together.
17. The appellant in this case in fact never made an application for rectification as such. Its first application was for constitution of a Full Bench while the second petition also contained similar prayer with an additional request for calling of the order which had in the meanwhile come in the field. The contention of the learned counsel that since the learned members of the Tribunal took up the second application as one under section 156 of the Ordinance and disposed of the same as such it should be taken to have been a rectification application under section 156 of the Income Tax Ordinance cannot be granted on account of its being factually wrong. Secondly, as noted above even if it is so considered, the fact remains that the prayer for rectification was rejected.
Therefore, it never became or could be read as a part of the order recorded under section 135 which in this case had already become barred by limitation.
18. The alternate plea based upon the aforesaid judgment of the Karachi High Court for conversion of this appeal into Constitutional petition is again without any basis. The case-law referred to in support of conversion hardly needs to be discussed for the sole reason the' exercise of that jurisdiction is discretionary with the Court. On going through the facts we have noted that no injustice or palpable wrong had been caused to the appellant. In fact, even if the appellant had approached us in time proposing questions Nos. 3 and 4 as re-produced above we would have declined to consider them on the ground of their being purely questions of fact. The issue as to the total turn over by an assessee during a particular assessing period hardly gives rise to a question of law when the order of the Tribunal is supported by the material/evidence on record.
19. Dismissed in limine. .