ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

I.T.R.A. No.687 of 2010

Date Order with signature of Judges

For Katcha Peshi.

21.08.2013.

Mr. Anwar Kashif Mumtaz, advocate for the applicant.

Mr. Muhammad Altaf Mun, advocate for the respondents.

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O R D E R

Aqeel Ahmed Abbasi, J: Through instant reference application, the applicant has proposed following questions of law, which according to learned counsel, arise from the impugned order dated 19.08.2010 passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi in ITA No.646/LB/2008 for assessment year 2002-2003:-

1) Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in confirming the order of the CIT (A), who had passed the order by invoking the provisions of sub-section 128(5) of the ITO, 2001 in case of an appeal pertaining to the repealed ordinance, 1979?

2) Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in deviating with the judgments of the Superior Courts, by confirming the order of the CIT (A), that no order should be passed without providing reasonable opportunity of being heard?

3) Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in confirming the alleged tax demand, ex-parte assessed by respondents?

2. Learned counsel for the applicant has only pressed question No.1 as referred to hereinabove and submits that it is a question of law which arise from the impugned order passed by the learned Tribunal Inland Revenue (Pakistan) Karachi. Learned counsel for the applicant has readout the orders passed by the Taxation Officer, Appellate Commissioner and the Appellate Tribunal Inland Revenue (Pakistan) Karachi and submits that the C.I.T. (Appeals) as well as learned Appellate Tribunal Inland Revenue (Pakistan) Karachi were not justified in law to dismiss the appeal of the applicant by referring to provision of Section 128 (5) of the Income Tax Ordinance, 2001, as according to the learned counsel the same were not applicable to the facts of the applicant’s case as the assessment year involved in the instant case pertains to 2002-2003, which according to learned counsel, was to be governed under the provision of Income Tax Ordinance, 1979 and not under the provision of Income Tax Ordinance, 2001. It has been further contended by the learned counsel that the Income Tax Ordinance, 2001 was in fact made applicable with effect from 01.07.2002 and was to be applied to tax year 2003 onwards, whereas for the assessment year for and upto 2002/2003, provisions of repealed Income Tax Ordinance, 1979 were applicable.

3. On the other hand, Mr. Muhammad Altaf Mun, learned counsel for the respondents has supported the impugned order passed by the Tribunal and submits that the matter pertaining to filing or hearing of appeals is procedural in nature, therefore, both the forums below have rightly referred to the provision of 128(5) of the Income Tax Ordinance, 2001 and there is no error in the order passed by the learned Appellate Tribunal Inland Revenue (Pakistan) Karachi. It has been further contended that even on merits, the applicant has no case nor any submissions have been made by the learned counsel for the applicant in this regard, hence no useful purpose will be served if the proposed question is answered in favour of the applicant.

4. We have heard both the learned counsel for the parties and perused the record. The right of appeal provided under the Repealed Income Tax Ordinance, 1979 before the Commissioner (Appeals) and the Appellant Tribunal stood revived in terms of the provisions of Section 127 and 131 of the New Income Tax Ordinance, 2001, however, with an exception provided in subsection (5) of section 239 of the Income Tax Ordinance, 2001, according to which the period prescribed for an application, appeal, reference or revision under the Repealed Ordinance, 1979, if expired on or before the commencement of the Ordinance, 2001, would not deem to have been extended. Similarly, in terms of subsection (4) of section 239 of the Income Tax Ordinance, 2001, it has been provided that any proceedings under the Repealed Ordinance, 1979 pending on the commencement of the Ordinance, 2001 before any Income Tax Authority, Appellate Tribunal or any Court by way of appeal, reference, revision or prosecution shall continue and dispose of as if the Ordinance, 2001 ha not come enforce.

5. In the instant matter, the tax year ended on/or before the 30^th June 2002, which was finalized after the Repealed Ordinance, 2001 has come into force, however, by applying the substantive provision as contained in the Ordinance, 1979. Thereafter an appeal was filed by the applicant before the Commissioner (Appeals), who dismissed the appeal on merits by referring to the provisions of the Repealed Income Tax Ordinance, 1979. However, while dismissing the appeal, it was further observed by the CIT (Appeals) that as regard other grounds, “since the appellant failed to join the proceedings initiated by Taxation Officer and to submit any response, Taxation Officer was justified in the computation of income. The appeal filed is not entertainable in terms of Section 128 (5) of the Income Tax Ordinance, 2001, which is accordingly rejected.”

6. The applicant preferred an appeal before the Appellate Tribunal Inland Revenue, against the said order passed by the CIT (Appeals), who vide impugned order has also dismissed the appeal in the following terms:-

“Having gone through the history of the case and after considering the rival arguments advanced from the learned AR of the appellant as well as the learned DR, we are of the considered view that the learned CIT (A) has rightly termed the appeal as not entertainable under Section 128(5) of the Income Tax Ordinance, 2001 from the reason that sufficient opportunity of being heard was provided to the appellant during the assessment proceedings, but the appellant displayed non-cooperative attitude and persistently failed to comply with the statutory notices served upon it. We, therefore, find no infirmity in the order of the learned CIT (A) which is upheld.”

7. However, while dismissing the appeal of the applicant on merits, Income Tax Appellate Tribunal has also referred to the provision of Section 128 (5) of the Income Tax Ordinance, 2001, and observed that “we are of the considered view that the learned CIT (A) has rightly termed the appeal as not entertainable under section 128(5) of the Income Tax Ordinance, 2001 for the reason that sufficient opportunity of being heard was provided to the appellant during the assessment proceedings, but the appellant displayed non-cooperative attitude and persistently failed to comply with the statutory notices served upon it. We, therefore, find no infirmity in the order of the learned CIT (A) which is upheld.”

8. It will be advantageous to reproduce the provisions of subsection (5) of section 128 of the Income Tax Ordinance, 2001, which reads as follows:-

“5. The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner.”

9. From perusal of the grounds of appeal as raised before the Appellate Tribunal Inland Revenue (Pakistan) Karachi, by the applicant, we have observed that no ground with regard to any finding by the CIT (A) relating to application of Section 128 (5) of the Income Tax Ordinance, 2001 was raised nor the learned counsel for the applicant has made any reference to any documentary material or evidence which according to the applicant was not entertained by the Commissioner (Appeals), while deciding the appeal of the applicant. Both the forums have dismissed the appeal of the applicant by referring to the substantive provisions of Income Tax Ordinance, 1979, whereas reference to provisions of Section 128 (5) of the Income Tax Ordinance, 2001, appears to have been made inadvertently, as the controversy involved in the instant matter does not relate to admission or otherwise of any documentary material or otherwise of any evidence which was not produced before the Commissioner.

10. In view of hereinabove facts, we are of the opinion that the question pressed by the applicant through instant reference application as referred to hereinabove does not arise from the order passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi, whereas the appeal of the applicant, in substance, was decided in terms of the provisions of repealed Income Tax Ordinance, 1979 by the Commissioner (Appeals) as well as the Appellate Tribunal Inland Revenue (Pakistan) Karachi.

Accordingly, instant Reference Application being devoid of any merits is hereby dismissed in limine.

J U D G E