ABDUL HAKIM Versus CENTRAL BOARD OF REVENUE

The facts which form the background are stated to be that the petitioner was a new assessee i.e. a person who had never been assessed to income-tax .until he filed his declaration of income-tax for charge years 1960-61 to 1968-69 in pursuance of Martial Law Regulation 32. The said Martial Law Regulation which was promulgated on 15th April 1969, provided for filing of returns by any person who has never filed his return of income or has never been assessed to tax showing his true income for the assessment year 1960-61 or any assessment year thereafter up to and including the assessment year 1968-69 vide sub-para. (iii) of para. 2 thereof. An assurance was given that no action of any kind whatsoever shall be taken against such persons for Riot having filed the returns before. Powers were conferred upon the .Central Bard of Revenue i.e. respondent No. 1 to make rules, issue orders, .instructions or directions consistent with the Regulation with the prior ,approval of the Chief Martial Law Administrator. This power was conferred by para. 6(i) of the Regulation. It was also provided that such rules, orders, instructions or directions issued by the Central Board of Revenue shall be .deemed to form a part of the Regulation and shall have effect accordingly. By sub-para. (ii) of para. 6 it was provided that such rules, orders, instructions or directions may provide for the determination of "excess income" for the purposes of the Regulation or for the computation of tax payable in pur suance of this Regulation.

2. The Central Board of Revenue issued circulars containing rules, instructions, directions and orders in pursuance of the powers conferred upon it by para 6 of the Regulation. The first such circular was M. L. R./1 of 1969 and was issued on 17th May 1969. The manner of filing of returns of true income under the Regulation; referred to as declaration,, was prescribed by para. 3 of the circular. The manner in which these` declarations were to be dealt with, income was to be determined and tax was to be computed, was provided for in para. 6 of circular Martial Law Regulation 1 of 1969, the ,relevant portion of which is reproduced below:

"6(a)(i) where a new assessee has filed year-wise returns of income, assessments for those years will be made in the normal manner, under the Income-tax Act and tax charged at the rates applicable for those years. The Investment and Bother allowances admissible under the Act will be allowed if the assessee can produce reasonable evidence to that effect.

(ii)

(b) where a consolidated statement of income has been filed and it relates to snore than one year, the income declared would be divided by the number of years for which it has been filed but in no case would it be allocated to more than 9 years (i.e. assessment years from 1960-61 to 1968-69) The average income so arrived at would be assessed as in sub-para. (a) above except that no rebate, deduction etc. admissible under the Act will be allowed."

Sub-para. (b) of para. 6 was further amended by circular No. Martial Law ,Regulation 3 of 1969, which is as follows:-

"Wherein the case of a new assessee, a consolidated statement of income has been filed and it relates to more than one year, the income declared would be divided by the number of years to which it pertains but in no case would it be allocated to more than 9 years (i:e., assessment years 1960-61 to 1968-69). The average income so arrived at would be assessed at the rates applicable to taxable income of that year without allowance of any deduction or exemption such as personal allowances, education allowance etc."

3. In pursuance of Martial Law Regulation 32 and the circular, referred to above, the petitioner filed year-wise returns of his income for the years 1960-61 to 1968-69 as follows:-

Years Rs.

1960-61 6,600

1961-62 6,600

1962-63 6,600

1963-64 6,600

1964-65 6,600

1965-66 6,600

1966-67 6,600

1967-68 7,000

1968-69 7,029

________

Total 60,229

_________

4. The case of the petitioner is that his declaration was taken up by Committee "C" constituted under Martial Law Regulation 32 which after discussing the matter with the petitioner substituted the figure of Rs. 60,229 `declared by the petitioner as his income for nine years by Rs. 72,000 with his agreement. However, subsequently in the course of its ,order that was com municated to the, petitioner, it transpired that the Committee had decided to treat the said amount of Rs. 72,000 as consolidated excess income for five years, and in pursuance of the said order the tax was recomputed by respon dent No. 3 wherein he did not allow any allowances admissible to the petitioner under the Income-tax Act, 1922 and which were admissible under para. 65(a)(i) of circular No. Martial Law Regulation 1 of 1969. The result was that a demand was placed on the petitioner to pay a further sum of Rs. 11,480 after adjusting Rs. 610, already deposited by him. The petitioner feeling aggrieved with the said order submitted a review petition to respondent No. 1 on 6th July 1971, but the same was rejected vide letter of the Second Secretary through respondent No. 1, dated 15/16-9-71. As respondent No. 2 started pressing the petitioner to pay Rs. 1.1,480 the balance demand due as a consequence of the orders passed by respondent No: 2, the petitioner has moved this Court to challenge the said demand by means of this writ petition.

5. The basis on which the impugned, computation has been made by Committee "C" is apparent from the following extract contained in its order:-

"The assessee appeared alongwith his A. R. Mr. Malik and the case was discussed with them in detail. After discussion of the case with the assessee and his A. R., it has been agreed to take consolidated excess income at Rs. 72,000 to be divided equally for five years."

6. On behalf of the petitioner it is contended that no such agreement was arrived at whereby the petitioner agreed to a consolidated excess income at Rs. 72,000 to be divided equally for five years and that in point of fact hav ing filed a year-wise return of his total income, his case fell for decision under para. 6(a)(i) of circular Martial Law Regulation 1 of 1969 and in such a case the assessment for these years was to be made in the normal manner under the Income-tax Act and that the investment and other allowances admissible under the Act were to be allowed, in case the assessee could produce reason able evidence to that effect, and that in point of fact the petitioner did produce evidence with regard to the allowances claimed by him. In the alternative it is . urged that Committee "C" at Rs. 72,000 has arbitrarily consolidated the excess income for five years, although the petitioner had filed year-wise returns of his total income and hence acted against the provisions of the Martial Law Regulation and the circular issued thereunder. In this connection it is pointed out that the mode of scrutinizing and process ing , of Martial Law Declaration is prescribed by para. 15 of circular No. Martial Law Regulation 1 1969. Sub para (a) whereof provides for acceptance of such returns where they are found by the Income-tax authorities to have been filed correctly; according to Sub para (b) thereof such returns are not found acceptable by the Department assessments at higher amounts will be made in agreement with the assessee. It is, therefore, manifest that the agreement between the Department and the assessee is only envisaged in respect of the amount of total income and not in respect of conversion or year-wise returns into consolidated statements of income. It is submitted that the agreement according to said paragraph between the Department and the assessee is to be reached on the quantum of excess income and that Committee 'C' had no jurisdiction to convert the year-wise returns of total income filed for nine years by the petitioner into the consolidated statement of income for five years. It was also pointed out that the last date for correction of returns was 16th of June 1959. As the conversion had taken place long after the said date, the order was against. the provisions of the relevant law and, therefore, infirm, on this score as well.

7. In reply, the respondent so far as the factual aspect was concerned, stated that the petitioner, had appeared with his counsel Mr. M. A. Malik, Advocate, Rawalpindi in the first instance and agreed to the assessment at R s. 72,000 instead of declared income of Rs. 60,229, vide his writing dated 18-12-69. This was attached as Annexure P. 3/1. It reads as follows :-

I agree to be assessed on excess income of Rs. 72,000 as against Rs. 60,229."

It is submitted that under sub-para. (ii) of para. 2 of circular No 1, as amended by circular No. 3, read with paras. 3(i)(a) and para. 3(b) of the former an assessee may file separate returns for cacti of the assessment years, but he will be required to produce reasonably acceptable evidence to show that the income declared for a particular year, was earned in that year, failing which the return pertaining to such years will be treated as consolidated statement of income for those years taken together. An assessee not filing year-wise return could file a consolidated statement for the year for which income was sought to be declared, stating the period to which it related- The assessee is required to provide reasonable basis that the consolidated income pertains to a period of more than five , years and he fails to supply any reasonable basis for such claim, the consolidated income is to be taken as for the latest five assessment years and assessed accordingly. According to the respondent the petitioner failed to produce reasonable acceptable evidence to show that the income declared by him for each of the nine assessment years, was earned during such years. He also could not supply reasonable basis that the income admitted by him vide Annexure Regulation 3/1 pertained to the period from the assessment year 1960-61 to the year 1968-69. The petitioner therefore, through his counsel vide applica tion dated 19-12-70 agreed that the assessment be made at Rs. 72,000 treating the same as consolidated income. The relevant portion of the said applica tion is reproduced below:

"That my client agree (sic) to be assessed on consolidated income on the basis of already agreed income of Rs. 72,000.

That my client shall have no objection if the agreed income is taken to be a consolidated income for the years agreed at.

Kindly finalise the Martial Law Regulation 32 processing as to enable my client, to pay the demand by 15-1-1971 as allowed under rules.

Dated 19-12-1970. (Sd.) M. A. MALIK

Advocate, Counsel."

In view of the above letter, it is submitted that it is not correct on the part of the petitioner to assert that he did not agree to the excess income of Rs. 72,000 being taken to be consolidated statement of income for five years. It is argued that the original declaration of income made by the petitioner stood modified by the application, referred to above, and in view of the provisions of para. 6(b) of circular No. 1, as modified by circular No. 3, the consolidated income of Rs. 72,000 was divided by five years without allowing any allowance. It is further submitted . that there was no bar on the 'C' Committee to accept the revised declaration made by the petitioner's counsel, vide his application dated 19-12-1970, even beyond the time limit prescribed for filing a revised declaration in para. 1.9 of circular No. 1, on the reasoning that the authority could waive the bar of limitation for the benefit of the assessee. In this case as the petitioner had not filed a correct declaration and in case the revised declaration was not accepted, he would have suffered the penalty for contravening the provisions of Martial Law Regulation 32, the acceptance of his revised declaration was clearly in his interest and for his benefit and it is not for him to contest the authority of the respondent for acting in his favour.

8. It may be mentioned that at the outset of the proceedings, the learned counsel for the respondent took up two preliminary objections. Firstly, that the orders impugned having been passed during the Martial Law period by a Martial Law authority, the same were immune from challenging in view of the provisions of Article 281(2) of the Interim Constitution and, secondly, the petitioner having himself agreed to the assessed income of Rs. 72,000 being taken as consolidated income, he could not be allowed to take up a contrary position and in any case could not be granted any relief in exercise of this Court's equitable writ Jurisdiction.

9: So far as the first objection is concerned, the petitioner relied upon the judgment of the Supreme Court in State v. Ziaur Rehman P L D 1973 S C 49, but the learned counsel for the petitioner submitted that the dictum of the said judgment must be read alongwith the recent pronouncement of the Supreme Court in the Federation of Pakistan v. Saeed Ahmad Khan and others P L D 1974 S C 151, wherein it has' been held that orders passed during the Martial Law period are not immune from attack when they can be shown to' have been passed without jurisdiction or are coram non judice or tainted with mala fides. I consider that it is not necessary to give a considered opinion with regard to the above mentioned preliminary objection, because I find 'that there is force in the second preliminary objection, taken up by the learned counsel for the respondent.

10. The application dated 19-12-70 submitted by the Advocate of the petitioner, whose contents have been reproduced above, clearly shows that the petitioner agreed to be assessed on consolidated income for the "years agreed at" and according to the Authorities he has been assessed to tax strictly according to his agreement. If this be the correct position, then even if the impugned order is found to have been passed without lawful authority, the petitioner is nevertheless disentitled to any relief in the exercise of the equitable writ jurisdiction of the Court. This principle has been succinctly stated in the case of Hafeezud Din v. Mian Khadim Hussain P L D 1965 Lah. 439 after noticing the dictums in Ghulam Mohyuddin v. Chief Settlement Commissioner P L D 1964 S C 829; Messrs Panna Lal Bingrag and others v. Union of India and others A I R 1957 S C 397 and Rex v. Williams Phillips: Ex parte (1914) I K B 608, as follows:- .

"A party litigating must act consistently. It is a wholesome doctrine of law that a party cannot be allowed to play fast and loose; blow hot and cold and approbate and reprobate, to the detriment of his opponent. Where a person knowingly and wilfully invites the Court to adopt a procedure, he cannot be permitted to turn round and blame the Court for the very 'same procedure which he himself invited the Court to follow. When the conduct of the applicant has been such as to disentitle him to the assistance of the Court,, no writ can be issued at his instance even though the impugned order may in fact be found to have been passed by the authority concerned without any jurisdiction. It is not that the order under attack has been clothed with any legality but because of the fact that the mouth of the person who has acquiesced in it is shut against it and in equity he cannot be heard to say anything against it. The Court will refuse to exercise its discretion in his favour in those circumstances. A person can be said to have been aware of the defect of jurisdiction in the Tribunal with the exercise of due diligence but did not object to the usurpation of the power by the Tribunal and invited it to exercise the jurisdiction which it lacked."

11. To overcome this hurdle, the learned counsel for the petitioner submitted a two-fold reply. It- was argued that the petitioner had never consented to his counsel agreeing to the revision of his earlier declaration and, secondly, that the Advocate appearing on his behalf before Committee "C" had no authority to "Act" on his behalf and to present any application on his behalf which could be binding on him. He could simply, "attend" before the Committee "C", as laid down by section 61 of the Income-tax Act and was not authorised to do anything more. In this connection attention was drawn to the provisions of Order III, rule 1 of the C. P. C., which lays down, as follows:-

"Any appearance, application or act in or to any Court, required to be authorised by law to be made or done by a party in such Court, may, except where otherwise expressly provided by any law for the time being in force, be made or done by the party in person, or by his recognized agent, or by a pleader appearing, applying or acting as the case may be, on his behalf."

Learned counsel contended that the terms of section 61 were significantly different from the provisions of Order III, rule 1, C. P. C. Section 61 of the Income-tax Act, to the extent relevant, lays down that:-

"61.-(1) Any assessee, who is entitled or required to attend before ......... any Income-tax authority in connection with any proceeding under this Act otherwise than when required under section 37 to attend personally for examination on oath or affirmation, may attend by a person authorised by him in writing in this behalf, being a relative of or a person regularly employed by the assessee, or a lawyer or ...... ..

It is argued that the words "attend by a person authorised by him" could possibly be equated, as to their import with the words "appearing on behalf of a party" as -provided in rule 1 of Order III of the C. P. C. and since a person who was only authorised to appear on behalf of the party to the cause could not act on his behalf ar d file applications on his behalf, which would be binding on him; similarly the application filed by the counsel for the petitioner would not be construed as an application by the petitioner himself and which could be pleaded as an estoppel. Consequently, the petitioner was not estopped from urging that he had never agreed to be assessed on the basis that he had filed a statement of consolidated income.

12. As regards the first question, an affidavit has been placed on record by Mr. Muhammad Yousaf, Assistant Income-tax Officer 'C' Circle, Rawalpindi, wherein it is stated that a letter No. A-38/71-72/GK, dated 24-6-72 was addressed to the Advocate of the petitioner inquiring as to the authority under which he had addressed the application dated 19-12-1970, on the basis of which the impugned order was passed. In .reply Mr. M. A. Malik, Advocate. who was the counsel for the petitioner in the said proceedings, has stated, in his letter dated 27-6-72, that' letter dated 19-12-70 written to the Income-tax Officer, D Circle, Rawalpindi, was done under the instruction of my client from whom I had a Power of Attorney authorising me to do such acts". The assertion that the letter dated 19-12-70 was written by the counsel on the instructions of the petitioner seems to be correct. A reference to the review petition filed by petitioner himself, who challenged the validity of the im pugned order reveals that the petitioner has not taken up the position therein that the letter dated 19-12-1970 addressed by his counsel was not written under his instructions. The only objection that he has raised to its forming the basis of the assessment' is a legal one, namely, that as his declaration was filed on year-wise basis, the Committee had a power to convert the year-wise declaration to a consolidated one and vice versa. Consequently, it is difficult to accept the contention raised before me by the learned counsel for the petitioner, that the letter dated 19-12-70 was written against 'the instructions of the petitioner.

13. So far as the second point is concerned, I agree with the learned counsel for the petitioner that if the authority of the authorised representa tive to attend before the Income-tax authority is considered only to extend to appearing on his behalf and does not include the power to act on his behalf, the letter addressed by the learned counsel for the assessee could not have been acted upon. In this connection it is, however, to be noted that the Income-tax - Act is a later legislation than the Code of Civil Procedure having been enacted in 1922 whereas the Code of Civil Procedure was already on the statute book, since 1908 wherein three different terms namely, "appearing", "applying" or "acting" on , behalf of the party were used. None of these terms has been used in section 61 of the Income-tax Act. It is, therefore, difficult to accept the suggestion that the Legislature when using the word "attend" in the Income-tax Act of 1922 wanted to equate it only with the word "appear" as has been employed in rule 1 of Order III of C. P. C. On the other hand, the word "attend" used in section 61 seems to be a more comprehensive word to include all the three concepts visualised in Order 111, rule 1, C. P. C., namely, of "appearing", "applying" or "acting." Furthermore, the provisions of section 61 are not relevant in the context of the present case, because they apply only to appearance before the Income-tax Authority. The Income-tax Authorities, as specified in section 5 of the Income-tax Act are the Central Board of Revenue, Directors of Inspection, Commissioners of Income-tax, Assis tant Commissioners, of Income-tax, Special Officers, Income tax Officers, Assistant Income-tax Officers, Examining Officers and Inspectors of Income-tax. The Committee "C" constituted under the Martial Law Regulation No. 32 is not specified in the list of Income-tax authorities enumerated in the Income-tax Act. Consequently, section 61 of the Act is, in terms not strictly relevant. Moreover, the petitioner had executed a power of attorney in favour of Mr. M. A. Malik, Advocate in which he had inter alia authorised him to give every kind of statement and to enter into any agreement or settlement on his behalf. He could, therefore, make the assessment and consent to the compilation of the income on the basis of the consolidated income. That an Advocate can make settlements on behalf of his client is settled law and this proposition has been reiterated in the recent case of Dr.-Ansar Hassan Rizvi v. Mazahir Hussain Zaidi 1971 S C M R 634, wherein it has been observed as follows:-

"It is pertinent to mention here that the matter had been. compromised twice, once before the Rehabilitation Commissioner on the 24th January 1958, and again before the High Court on the 7th January 1959, and the petitioner had agreed to vacate the disputed house.

The contention that the Advocate of the petitioner had no authority to compromise the matter on behalf of the petitioner is untenable. The Privy Council has held in the case of Sourendra Nath Mitra and others v. Tarubala Dasi (A I R 1930 P C 1 5 8) that unless there is specific authority to the contrary, and in the absence of q written authority such as a vakalatnama an Advocate has implied authority of his client to settle the suit. It has not been contended that the learned Advocate concerned held any vakalatnama which expressly or impliedly debarred him from entering into a compromise. Nor anything has been pro duced to show that the learned Advocate's implied authority was countermanded by the express direction of his client."

These observations are applicable with full force to the facts and circumstances of this case.

14. The upshot is that the preliminary objection raised on behalf of the respondent prevails. The writ petition accordingly fails and is hereby dis missed, but with no order as to costs.

Petition dismissed.