IN THE HIGH COURT OF SINDH, KARACHI
I.T.R.A. No.18 of 2014
Order with signature of Judge
Mr. Justice Aqeel Ahmed Abbasi.
Mr. Justice Nazar Akbar.
Hearing of Case
1. For orders on CMA No.269/2014
2. For hearing of Main Case.
Syed Asif Ali, advocate for the applicant.
O R D E R
Aqeel Ahmed Abbasi, J.: Through instant reference application, the applicant department has proposed following questions, which according to learned counsel for the applicant, are questions of law arising from the impugned order dated 08.10.2013 passed by the Appellate Tribunal Inland Revenue of (Pakistan), Karachi, in ITA No.267/KB/2012 for the Tax Years 2010 U/S 122(5A) of the Income Tax Ordinance, 2001:-
“Whether under the facts and circumstance of the case, the learned ATIR was justified to dismiss the departmental appeal without dilating on the 1st ground of appeal i.e.”The order passed by the learned (Appeals) is bad in law and on fact of the case.”
“Whether under the facts and circumstance of the case, the learned ATIR was justified in upholding the action of CIT(A) declaring proceeding u/s 122(5A) of the Income Tax Ordinance 2001 as illegal in view of case decisions of Honourable High Court Islamabad in the cases reported as (2006) PTD 1617, 976 PTD 723.”
2. Learned counsel for the applicant after having readout the questions proposed through instant reference application, and the impugned order passed by the Appellate Tribunal Inland Revenue, has candidly submitted that the questions proposed through instant reference application are not properly worded, whereas, the core issue relating to jurisdiction exercised under Section 122(5A) of the Income Tax Ordinance, 2001, however, submits that the Appellate Tribunal Inland Revenue has failed to decide the first ground of appeal raised by the applicant department i.e. “the order passed by the Commissioner (Appeals) was bad in law and fact of the case.” Per learned counsel, Commissioner (Appeals) was also not justified to delete the addition made by the Assessing Officer in the instant case, therefore, the department has filed instant reference application before this Court with a prayer to set-aside the order passed by the Commissioner Inland Revenue (Appeals) and the Appellate Tribunal in this respect.
3. We have heard the learned counsel for the applicant, perused the impugned order passed by the Appellate Tribunal Inland Revenue as well as the orders of the two (02) authorities below. From bare perusal of the questions as formulated through instant reference application, it appears that both the questions cannot be termed as questions of law arising from the impugned order passed by the Appellate Tribunal Inland Revenue in the instant case, for the reason, that both the questions, besides being generalized in nature like grounds of appeal do not arise from the impugned order passed by the Appellate Tribunal. Whereas, reference to the judgments of the High Court in the questions proposed otherwise dis-entitles the department to agitate such questions before the High Court for the reason that as an order passed by the Appellate Tribunal Inland Revenue, while placing reliance on the judgment of the High Court cannot be agitated unless, the said judgment of the High Court has been set-aside by the Hon’ble Supreme Court, or the applicant is in a position to show that either the judgment relied upon by the Appellate Tribunal Inland Revenue is either per-incuriam or the facts and the legal point involved are distinguishable to the facts of the case. In the instant case, no such argument has been advanced by the learned counsel for the applicant, which otherwise could justify filing of instant reference application on the above questions as proposed. We have further observed that while dismissing the appeal filed by the department, the Appellate Tribunal Inland Revenue has been pleased to observe that since the applicant department did not raise any ground with regard to jurisdiction of the Taxation Officer to amend the assessment in the instant case, which was declared to be illegal and without lawful authority by the Commissioner (Appeals), therefore, merely agitating the deletion of addition made by the Taxation Officer by the applicant department, without agitating the main ground of assumption of jurisdiction by the Taxation Officer under Section 122 (5A) of the Income Tax Ordinance, 2001, was equally misconceived. It will be advantageous to reproduce the relevant finding of the Appellate Tribunal to this effect as contained in paragraph 8 of the impugned order passed by the Appellate Tribunal Inland Revenue as follows:-
“8. We have heard the arguments advanced by both the sides and have also perused both the impugned orders and as well as grounds of appeal filed by Commissioner Inland Revenue, Large Taxpayers Unit, Karachi and are of the considered opinion that this appeal is liable to be dismissed for the reason that the Department has not contested the main issue arising out of both the impugned order. It seems that the office of Commissioner Inland Revenue, large Taxpayers Unit, Karachi has filed this appeal without perusal of impugned order dated 31.01.2012. Although, one of the main objection contested by Respondent before the Commissioner Inland Revenue (Appeals) Karachi was jurisdiction exercised by Additional Commissioner Inland Revenue U/s 122(5A) which according to Respondent was without jurisdiction and being a manufacturer, Respondent had correctly filed statement U/s 115(4) as tax deducted represents final tax liability. The learned CIR (Appeals) had accepted the contention of Respondent and had held that order U/s 122(5A) to be in violation of existing requirements of Section 122(5A) the order passed U/s 122(5A) as without jurisdiction and authority. Although, after deciding the appeal on legal issue, the CIR (Appeals) was not required to record any finding on merits, but after considering the arguments advanced before him, he had also deleted the additions. While contesting the order of CIR (Appeals), the Department has restricted the objections to deletion of additions, but did not contest the core issue through which the jurisdiction was exercised U/s 122(5A) as no ground of appeal has been taken by the department against the legal issue of Section 122(5A). Thus, we are of the considered opinion that as the Department has not contested this main and important issue arising out of the impugned order and as the foundation of entire proceedings U/s 122(5A) has collapsed, the entire super structure has also collapsed. We therefore agree with the objection of learned Counsel for Respondent which is found valid and forceful. Accordingly, in view of above discussion, the appeal filed by Commissioner Inland Revenue, large Taxpayers Unit, Karachi is dismissed.”
4. In view of hereinabove facts and circumstances of the case, we are of the considered opinion that instant reference application is devoid of any merits and has been filed by the applicant department without proper application of mind. We may observe that tendency of filing frivolous reference applications before this Court, in the absence of any valid grounds or formulating some substantial questions of law requiring interpretation and authoritative pronouncement by this Court while exercising its reference jurisdiction under Section 133 of the Income Tax Ordinance, 2001, has recently increased, which not only enhances the burden of this Court, but also involves financial implications and adverse impact on public exchequer. We are of the opinion that such tendency is required to be discouraged and curtailed reasonably. In view of hereinabove facts and circumstances of this case, while dismissing instant reference application for being totally misconceived and devoid of any merits, we would recommend to the Chairman, Federal Board of Revenue to streamline the filing of reference applications before this Court, by creating Legal Divisions in various offices of the Revenue Department all over Pakistan, which may comprise of a senior Officer of the rank of Commissioner (Legal) Inland Revenue, duly assisted by Additional Commissioner and Taxation Officers (Legal Division), who shall be well conversant with the law of income tax as well as the legal procedure of filing appeals before the Appellate Tribunal, Inland Revenue and references before the High Court, so that the instance of the revenue in respect of some intricate question of law, would be presented in a proper manner and would facilitate quick disposal of tax matters on merits, instead of being dismissed on technical grounds or on account of non-prosecution.
5. Accordingly, instant reference application is dismissed in limine along with listed application as no question of law as proposed hereinabove arise from the impugned order passed by the Appellate Tribunal.
Let copy of this order be sent to the Chairman, Federal Board of Revenue, for his information and necessary action in this regard.
J U D G E
J U D G E