2011 P T D 2358
[Lahore High Court]
Before Muhammad Khalid Mehmood Khan and Muhammad Farrukh Irfan Khan, JJ
COMMISSIONER OF INCOME TAX/WEALTH TAX, LEGAL DIVISION, MULTAN
Lady Dr. MUSARRAT MUMTAZ, C/o D.H.Q. Hospital, D.G. Khan
T. R. No.150 of 2008, heard on 18th May, 2011.
Ch. Muhammad Asghar Saroha for Appellant.
Muhammad Asghar Bhutta for Respondent.
Date of hearing: 18th May, 2011.
MUHAMMAD FARRUKH IRFAN KHAN, J.—In this Tax Reference under section, 133 of the Income Tax Ordinance, 2001 against the order dated 13-3-2008 passed by Income Tax Appellate Tribunal, Lahore (hereinafter referred to as ITAT”), the following questions have been posed for adjudication by this Court:–
(1)? Whether on the facts and in the circumstances of the case, the learned ITAT was justified to dismiss departmental appeals in limine when appeals were filed as per directions of ITAT under the old Income Tax Ordinance, however, section of new Ordinance was inadvertently mentioned?
(2)? Whether appeals of the department were liable to be dismissed merely for filing of the same under new Ordinance when Apex Court in a reported judgment cited as 1993 SCC 1011 (CIT v. Asbestos Cement Industries Limited Karachi and others) has held that filing of appeal is a procedural matter?
2. Brief facts giving rise to this Tax Reference are that an assessment was made under sections 62 and 111 read with section 239 of the repealed Income Tax Ordinance, 1979 for the assessment year 2002-2003 vide order dated 6-10-2003 whereby a demand in the amount of Rs.2,43,044 was created by the Assessing Officer against Lady Dr. Musarrat Mumtaz (hereinafter referred to as respondent). Aggrieved with the order the respondent filed an appeal bearing No.623 before the Commissioner Income Tax (Appeals) on 23-10-2003 which was decided in her favour vide order dated 5-6-2004. Against this order the Commissioner Income Tax (Appeals) preferred an appeal before the learned Income Tax Appellate Tribunal (ITAT) under section 131 of the Income Tax Ordinance, 2001 instead of section 134 of the repealed Income Tax Ordinance, 1979. The orders dated 2-5-2007 and 13-3-2008 were passed by the ITAT under sections 135/156 of the repealed Income Tax Ordinance, 1979. The date of service of the said orders on the parties was 11-4-2008. Admittedly, no reference application under section 136(1) of the repealed Income Tax Ordinance, 1979 was filed before the ITAT. Tax Reference under section 133 of the Income Tax Ordinance, 2001 was filed in this Court on 8th of September, 2008 by the Commissioner Income Tax (Legal).
3. Learned counsel for the respondent has raised two preliminary objections as to the maintainability of this Tax Reference. The first being that it was required to be filed under section 136(1) of the repealed Income Tax Ordinance, 1979 instead of section 133 of the Income Tax Ordinance, 2001. It has also been pointed out by the learned counsel that the entire proceedings from the very beginning are vitiated by lack of application of mind as the assessment for the year 2002-2003 was done under the repealed Income Tax Ordinance, 1979, however, appeal was tiled by the Commissioner Income Tax under section 133 of the Income Tax Ordinance, 2001 instead of section 134 of the repealed Income Tax Ordinance, 1979. Furthermore, no reference application under section 136(1) of the repealed Income Tax Ordinance, 1979 was filed before the ITAT which was a legal requirement that has not been followed.
4. A second preliminary objection has also been taken by the learned counsel for the respondent that this Tax Reference is also barred by time as the same was filed on 8-9-2008 against the decision of ITAT dated 2-5-2007 and 13-3-2008 which was served on the parties on 11-4-2008 (relevant date for determination).
5. Learned counsel for the appellant, on the other hand, states that such procedural issues should not intervene in the way of disposal of matters on merits and that the ITAT has erred in passing its impugned order dated 11-4-2008 on such trivial procedural matters.
6. We have heard the learned counsel for the parties on these preliminary objections and have also looked into the record. The first preliminary objection of the learned counsel for the respondent that the Tax Reference has been filed under Income Tax Ordinance, 2001 while the assessment was initiated under repealed Income Tax Ordinance, 1979, gets support from a case reported as 1988 PTD 227 (High Court of Sindh Karachi) wherein a Reference filed under the repealed Income Tax Ordinance, 1979 was held to be illegal as the original assessment therein was made under the Income Tax Act, 1922. This case has been further followed in 2003 PTD 2109 (Lahore High Court) wherein it was held that “since the assessments were made under the old law those were deemed to be pending in the appeal before the Tribunal and Reference before this Court ought to have been filed under the repealed Income Tax Ordinance, 1979 and not under the Ordinance, 2001”. Moreover in the case reported as 2003 SCMR 1505 Khalid Saeed v. Shamim Rizwan and others the Hon’ble Supreme Court of Pakistan has held that “if a method is prescribed to do a thing in particular manner, same must be followed in letter and spirit”. As such the contention of the learned counsel for the appellant that these are trivial procedural matters has no force in it.
7. On the point of limitation it is to be noted that section 136 of the repealed Income Tax Ordinance, 1979 requires a Reference to be filed within ninety days of the date upon which the assessee or the Commissioner is served with notice of an order under section 135 ibid. The assessee or the Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall, within ninety days of the receipt of such application, draw up a statement of the case and refer it to the High Court. If, on an application made under subsection (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may within one hundred and twenty days from the date on which he is served with notice of the refusal, apply to the High Court and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, frame a question of law and the provisions of subsections (5), (6), (7) and (8) shall, so far as may be, apply as they apply to a reference made under subsection (1). Whereas section 133 substituted by Finance Act, 2005 in the Income Tax Ordinance, 2001, requires as follows:–
“(1) Within ninety days of the communication of the order of the Appellate Tribunal under subsection (7) of section 132, the aggrieved person or the Commissioner may prefer an application, in the prescribed form along with a statement of the case, to the High Court, stating any question of law arising out of such order.
The Reference was filed on 8-9-2008 whereas date of the service of orders on the parties was 11-4-2008 so considering the limitation period from whatever angle this Tax Reference has been filed after 150 days of the date of service of the said orders while the limitation to do so was 90 days extendable to 120 days in the case of repealed Income Tax Ordinance, 1979 and that of 90 days under the Income Tax Ordinance, 2001. It is well settled that the provisions of the Limitation Act, 1908 would be applied to the proceedings under the Income Tax Ordinance, 2001. The words of section 3 of the Limitation Act are mandatory in nature and that every suit or application, instituted after the period of limitation shall, subject to the provisions of sections 4 to 25 of the Limitation Act, be dismissed although limitation has not been set up as a defence. No application for condonation of delay in filing the Reference has been placed before us. In fact, the factum of delay has been taken very lightly. In so far as section 5 of the Limitation Act is concerned, it is a well-settled principle that once limitation starts running no subsequent event can stop or suspend it. The matters to be dealt with under the Limitation Act are to be considered strictly in accordance with the language of the words used by the legislature. Therefore, provisions of Limitation Act are to be applied without having any regard to equitable consideration. Section 160(b) of the Repealed Ordinance and section 226(b) of the Income Tax Ordinance, 2001 provides that the period during which any assessment or other proceedings under the Ordinance are stayed by any Court, shall be excluded while computing the period of limitation, however, this is not the case of the appellant.
Keeping in view the above provisions of the repealed Income Tax Ordinance, 1979 and the current provisions also the Tax Reference is time barred.
8. In view of the above position, we are afraid that this Tax Reference is not maintainable and is accordingly dismissed on the basis of preliminary objections raised to the maintainability thereof.
S.A.K./C-10/L Reference dismissed.