' In this Constitutional petition following prayer has been made:--"Accordingly it is respectfully prayed that the writ petition may kindly be accepted, the letter/notices of the respondent, dated 22-7-2002 and 7-1-2003 issued by respondents may be declared to be illegal, void and without lawful authority and the, proceedings started by the respondent may be annulled and quashed being illegal, void and without jurisdiction."
2. The petitioner is an assessee of the Income Tax Department. On 28-7-2002 he was served with a notice expressing the intention of the Deputy Commissioner of Income Tax (DCIT), Circle-02, Companies Zone-II, Lahore to reopen his income-tax assessment for the year, 2001-2002. The notice purported to have been issued under section 13(1)(aa) of the late Income Tax Ordinance, 1979 (hereinafter to be referred as "Ordinance, 1979"), reads as under:-- "This office is in possession of an information that you have made advance at Rs,2,240,000 to Mr. Fazal Haque, son of Abdul Samad, Resident of 6-G Model Town, Lahore on 6-12-1993. The said information, came to the notice of the Department during the period relevant to assessment year, 2001-2002. When compared with your assessment record, no such advance is appearing 'in your assessm ent record, therefore, your assessment for the assessment year, 2001-2002 was reopened under section 65 of the Income Tax Ordinance, 1979 read with proviso to section 13(1) of the Income Tax Ordinance, 1979.
' In response to notice under section 65, you have filed return of total income under protest declaring income as before. You have again failed to file any wealth statement or to submit any explanation with reference to the above referred investment/ advance.
' In these circumstances, the undersigned intends to tax the said advance/investment in your hands being your income from unexplained sources as provided under section 13(1)(aa) of the Income Tax Ordinance, 1979."
3. It appears that the reply submitted by the petitioner in which he denied to have made any advance during the aforesaid period was not accepted. By way of letter, dated 7-1-2003 the respondent officer served show-cause notice upon the petitioner as to why the said amount of Rs, 22,40,000 may not be added towards his total income under the said provision of late Ordinance, 1979. Hence this petition.
4. The Revenue in its reply and comments has relied upon a civil suit, which was allegedly filed by the petitioner against the gentleman mentioned in the notice for sale of property and recovery of Rs,22,40,000 with Rs,60,000 per month as profit. It is also alleged that the aforesaid civil suit was filed by the petitioner as plaintiff only after he came to know of the initiation of these proceedings.
Lastly, it is submitted that in view of the amendment in proviso to subsection (1) of section 13 of Ordinance, 1979 income chargeable to tax under that section includable in the total income of the income year relevant to the assessm ent year in which the discovery was made.
5. I have heard the learned counsel for the parties. Learned counsel for the petitioner contends that I will readily agree that the impugned notice is clearly barred by limitation inasmuch as it seeks to investigate and to treat, a sum as undisclosed income, which was allegedly lent as back as on 6- 12-1993. Learned counsel is correct in pointing out that the matter pertaining to the assessment year, 1993-94 at best could be reopened latest by 30-6-2000 in view of proviso to subsection (3) of section 65 of Ordinance, 1979. A transaction, whether admitted or otherwise, which happened earlier to that period could not be brought into any subsequent assessment year after expiry of the statutory period merle for the reason that the current assessment record did not indicate or reflect such transaction. As the impugned notice indicates that the Assessing Officer sought to add and treat the aforesaid sum as income for the year, 2001-2002, which was not legally permissible. If the interpretation of the Assessing Officer is accepted then the statutory limit provided for in subsection (3) of section 65 of the Ordinance, 1979 would be rendered redundant and that can never be the intention of the law. The reference of the Revenue i1t their reply to the provisions of subsection (1) of section 13 of the Ordinance, 1979 is totally misplaced inasmuch as these provisions could only be invoked for the purpose of application of rate. That provision also cannot directly or indirectly extend the period of five years limitation provided for reopening of an assessm ent.
6. Since the impugned notice on the face of -it is barred by limitation, the factual aspects of the case as to the exact nature of the transaction in question need not be gone through or relied upon.
7. This petition is accordingly accepted and the impugned show-cause notice and all subsequent proceedings having been taken out of limitation prescribed for reopening of an assessment under the late Ordinance, 1979 are declared to be without lawful authority.