' TALAAT QAYUM QURESHI, J.---Iftikhar Hussain Alvi, the petitioner, an individual assessee is qualified Chartered Accountant and a Tax Advisor filed his tax return pertaining to the income year 1989-90.
Alongwith the said return, a wealth statement was also filed showing that he had acquired shares of 15,50,000 of Kaghan Ghee Mills (Pvt). Ltd. Gadoon Amazai Industrial Estate, Swabi and Rs,2,50,000 loan taken by him. The Assessm ent Officer served notice under section 62 of the Income Tax Ordinance, 1979 to show the source of income. The assessee/petitioner submitted return in which it was sated that shares of 15,50,000 were gifted to him by Syed Qasim Shah group sponsors of Kaghan Ghee Mills Ltd. In lieu of his present and past services. Rs,3,50,000 were his past savings and Rs,2,50,000 was loan obtained -from his friends. The Assessment. Officer being not satisfied With the expiation furnished by the assesse treated the said assessment of Rs,18,00,000 as unexplained -income under section 13 (1) (aa) of the Income Tax Ordinance vide order dated 76-6- 1993. Feeling aggrieved of the said order, the assessee/petitioner filed appeal before the Commissioner Income. Tax (Appeals), which was accepted vide order dated 12-4-1994. The officials of the Income Tax Department being not satisfied with the order of the learned Commissioner Income Tax (Appeals) filed appeal to the Income Tax, Appellate Tribunal, Peshawar Bench which was allowed vide order dated 16-5-1996. The order of the learned Commissioner Income Tax (Appeals) was set aside and the order of the Assessment Officer was restored. The petitioner filed reference before the learned Income Tax Appellate Tribunal with the request that the same be referred to this Court for determination of legal questions but his petition was dismissed vide order dated 28-4-1997. Hence he filed this reference under section 136(2) of the Income Tax Ordinance to resolve the following question of law:- "Whether in the facts and circumstances of the cense, the learned Income Tax Appellate Tribunal was legally justified in holding that the benefit of clause (8) of Part-IV of .The Second Schedule to Income Tax Ordinance, 1979 is not available in a case which was pending finalisation when said clause was inserted in the Income Tax Law."
2. Mr. Lssac Ali Qazi, the learned counsel representing the petitioner argued that the petitioner filed his return for Income Tax for the year 1990-91. He also filed wealth statement showing that he acquired shares of Kaghan Ghee Mills worth Rs,15,50,000 on 31-1-1990 and obtained loan of Rs,2,50,000 from his friends. He was issued notice under section 62 of the Income Tax Ordinance to explain his source of income. He filed reply and made explanation therein. His assessment was yet to be made when the Government issued Notification S.R.O. 1283(1)/98, dated 13-12-1990 whereby not only section 118-C was inserted but clause (8) of Part IV to the Second Schedule of the Income Tax Ordinance were also inserted. This notification was issued on 13-12-1990. The petitioner was entitled for the benefit of clause (8) but the same was denied to him by not properly interpreting the same by the Assessing Officer as well as the Income Tax Appellate Tribunal.
3. It was further argued that clause (8) has retrospective application prohibiting the Assessing Officer to probe into source of income under section 13 (1) (aa) of the Ordinance.
4. On the other hand Mr. Eid Muhammad Khattak, the .Learned counsel representing Income Tax Department argued that S.R.O. No,1283(I)/90 dated 13-12-1990 had no retrospective application, therefore, the Assessing Officer as well as the Income Tax Appellate Tribunal have properly interpreted the same and their orders, are in accordance with law.
5. We have heard the learned counsel for the parties and perused the record annexed with the reference.
6. It is an admitted position that the assessment of the petitioner was pending with the Assessing Officer when Notification S,R.O. 1283(I)/90 dated 13-12-1990 was issued by the Government. Through this notification clause (118-C) of Part I of the Second Schedule and clause (8) of Part IV of the Second Schedule to the Ordinance were inserted. Clause (118-C) and clause (8) are reproduced hereunder for convenience:- "(118C) (1) Profits and gains derived by an assessee from an industrial undertaking set up between the first day of December, 1990 and the thirtieth day of June, 1995, both days inclusive, for a period of eight years beginning with the month in which the undertaking is set up or commercial production is commenced, whichever is the later."
"(8) The provisions of section 13, Chapter XI or Chapter XII shall not apply in respect of any amount invested in the purchase of shares of a company owning and managing an industrial undertaking the profits and gains from which are exempted under clause (118C) or clause (118D) or clause (118E) of Part I of this Schedule: ' Provided that the letter of credit for the import of plant and machinery required for the setting up of the industrial undertaking has been opened before the thirtieth day of June, 1992 and in the case of locally manufactured plant and machinery, a firm order for its purchase has been placed before the said day."
7. Perusal of the above quoted clauses shows that both clauses are inseparable as both were inserted together. This was done in order to encourage the investment in the industrial undertaking.
The specific dates for entitlement of benefit of clause (118C) have been given in the said notification. Clause (8) which has been quoted above clearly provides that section 13, Chapter XI and Chapter XII shall not apply in respect of any amount invested in the purchase of shares of a company owning and managing industrial undertaking the profits or gains from which are exempted under clause (118C) or (118D) or (118E) of Part Ito the Second Schedule. It is an admitted position that Income of Messrs Kaghan Ghee Mills (Pvt.) Ltd. In which the petitioner= had made investment by purchasing shares was assessed under clause (118C). When the company itself was assessed under clause (118C) then the petitioner was entitled for protected a granted to his investment under clause (8) i,e, the investment in the company which was enjoying benefits of clause (118C) was immune from probe.
8. Moreover, the Notification S.R.O. 1283 (1)/98 dated 13-12-1990 was promulgated when "the assessm ent of the petitioner was pending i,e, the assessment order was passed on 29-6-1993. It is by now established law that amendment brought in law during the pendency can be B considered by the authorities concerned, and benefit if any be provided to the assessee. In Commissioner of Income Tax v. Shah Nawaz Ltd. And others (1993 SCMR 73) the dicta laid down by the High Court that cases which were pending at the time of amending law was enacted i,e, cases which has not been finally determined or proceedings which had not attained finality the retrospective effect of the amending law would therefore, apply only to those cases where the assessment has not been C made by the I.T.O. Or where the appeal was pending before the Tribunal or the reference was sub-judice before the High Court at the time when the amending law was enacted was approved by the august Supreme Court of Pakistan.
9. The Income Tax Officer and the learned Income Tax Appellate Tribunal have failed to appreciate this legal position properly, therefore, the assessment order passed by the Income Tax Officer and that of the Income Tax Appellate Tribunal are without lawful authority.
10. So far as the other argument of the learned counsel for the petitioner that clause (8) has retrospective application preventing the Assessing Officer to probe into source of income under section 13 (1)(aa) of the Ordinance is concerned, the same also has a force in it for the following reasons:- Firstly, in clause (8) the word "invested" has been used which is of key importance as it has been used in past participle form. It had covered all those investments which had been made in the industrial undertaking whose income was assessed under clauses (118C), (118D) and (118E) of Part I of the Second Schedule of the Ordinance at the time of insertion of clause (8). It is, worth- mentioning here that Messrs Kaghan Ghee Mills (Pvt.) Ltd. Had been set up prior to the issuance of Notification S.R.O. 1283 (I)/90 dated 13-12-1990 and pursuant to the said notification the said company was treated as set up and assessed under clause (118C).
' Secondly, in the Nocification S.R.O. 1283(1)/90, dated 13-12-1990 no date has been given for application of clause (8), therefore, there is no bar imposed by the authorities which issued the said notification to interpret retrospectively ' Thirdly, clause (8) is beneficial in nature. It is also by now established principle of law that if any notification/circular is of benevolent nature, the same would go to the assistance of assessee. In this regard reliance can safely be placed on the following judgments:-
(i) The Commissioner of Income Tax, East Pakistan, Dacca. V. Noor Hussain (PLD 1964 SC 657)
(ii) Laxmichand Hirjibhai v. CIT, Gujrat-III (128 ITR),
(iii) Gurjargravures (Pvt.) Ltd. v. Income-Tax Officer, Company Circle-VIII, Ahmedabad, and another (154 ITR 786).
(iv) Rajan Ramkrishna v. Commissioner of Wealth Tax, Gujrat-1 (127 ITR 1).
(v) Navnil Lal C. Zaveri v. K. K. Sen (56 ITR 198).
(vi) Ellerman Lines Ltd. v. CIT (82 ITR 913).
(vii) Bechardas Spinning and Weaving Mills Co. Ltd. v. CIT (ITR 153 of 1976).
(viii)Tata Iron & Steel Co. Ltd. v. N. C. Upadhyaya (96 ITR 1).
(ix) Navnit Lal Ambalal v.CIT (1976) (105 ITR 735).
(x) M. M. Annaiah v. CIT (76 ITR 582 (Mys).
(xi) Dr. T. P. Kapadia v. CIT (87 ITR 511 (Mys).
(xii) Dattatraya Copal Shette v. CIT, Poona Range, Poona Kania.
(xiii)CIT Kerala-I v. B. M. Edward, India Sea Foods, Cochin (119 ITR 334).
(xiv)Raja Rajeswa ri Weaving Mills v. Income Tax Officer "A" Ward, Cannanore, and another (113 ITR 405).
(xv) CIT Assam, Nagaland, Meghalaya, Manipur and Tripura (102 ITR 408).
(xvi) (150 ITR 460).
(xvii) UCO Bank v. CIT (237 ITR 889) = {1999 PTD 3752).
(xviii) T. R. No,33/97 (Usman Ghee Industries v. CIT; and
(xix) CIT y. Muhammad Kassim (2000 PTD 280).
Fourthly, the purpose of insertion of clause (8) was to encourage industrialists to promote the investment in the industrial undertaking without fear of probing their source of income, therefore, employing clause (8) retrospectively would be in line of promotion of the purpose of the legislation.
It is not always necessary that retrospective application is found in express words. In the absence of express words whenever there is intendment to the effect that some provisions will be retrospective in its application, effect can be given to that intendment. In this regard reliance can be safely placed on Alif Din v. Noor (PLD 1969 Pesh. 62).
11. The net result of the above discussion is that the Income Tax Officer and learned Income Tax Appellate Tribunal have failed to properly appreciate that the petitioner was entitled to benefit of clause (8) of Part I of Second Schedule of the Ordinance. We, therefore, while answering this tax reference hold that the petitioner was entitled to benefit of clause (8) of Part I of the Second Schedule of Income Tax Ordinance, 1979. We also set aside the assessment order dated 26-6-1993 passed by the Income Tax/Assessment Officer and the order of learned Income Tax Appellate Tribunal dated 16-5-1996 and restore the order of the Commissioner Income Tax (Appeals) dated 12-4-1994. The reference is sent to the Income Tax Appellate Tribunal in terms of section 136 (5) of the Ordinance with the direction to pass necessary orders as required under the above mentioned section of law. The Registrar of this Court is directed to send certified copy of this judgment under the seal of the Court and under his signatures to the appellate Tribunal enabling it to do the needful. There shall be no orders as to costs.