I.T.A. NOS. 1889/LB TO 1894/LB OF 1982-83, DECIDED ON 23RD JULY, 1984. Versus I.T.A. NOS. 1889/LB TO 1894/LB OF 1982-83, DECIDED ON 23RD JULY, 1984.
ORDER
These are six departmental appeals against an individual deriving income as a partner of a registered firm. Brief facts of the case are that the assessee's income was determined in the assessment order passed in respect of the firm of which the assessee was a partner. No return was filed by the assessee in all the years under consideration nor any assessment order was passed in his case. Since the income of the assessee had escaped assessment, the I.T.O. issued a notice under section 65 of the Income‑tax Ordinance (hereinafter referred to as the Ordinance) on 6‑4‑1981 which was duly served on 24‑4‑1981 but no compliance was made within seven days as was required in the notice. Another notice was issued under section 61 of the Ordinance on 25‑5‑1981. It was served on 30th May 1981‑‑for 2‑6‑1981. Again no compliance was made. However, subsequently the returns for all the years under consideration were filed on 11‑6‑1981. On the basis of these returns the assessing officer completed the assessment on 6‑1‑1982 probably on the basis of income determined in respect of the firm and f the income was assessed under:
1973‑74
Rs. 19,969
1974‑75
Rs. 22,462.
1975‑76
Rs. 19,773
1976‑77
Rs. 18,890
1977‑78
Rs. 35, 013
1978‑79
Rs.14,411
This income was however assessed under section 23(1) of the repealed' Income‑tax Act (hereinafter referred to as the Act) and it was so mentioned on the top of the assessment order as well as in the bottom of the order in the following words:
"Assessed under section 23(1)."
The learned A.A.C. on appeal came to the following conclusion and t annulled the assessment for all the years under consideration:
(1) That issuance of notice under section 65 of the Ordinance on 6‑4‑1981 was without legal authority.
(2) An assessment which might have become time‑barred within the meaning of section 34 of the Act could not be extended by taking refuge under section 166(2)(c)(ii) of the Ordinance.
(3) An assessment could not be framed on 16‑1‑1982 under section 23(1) of the Income‑tax Act after issuing of a notice under section 65 of the Income‑tax Ordinance."
2. The learned D.R. has challenged the order of the learned A.A.C. on the ground that the notice under section 65 of the Ordinance was rightly issued by the I.‑T.O. as it was the only provision under which the case could be re‑opened. It was further submitted that the learned A.A.C. was not justified in holding that the assessment which would have become time‑barred under section 34 of the Act, could not be re‑opened under section 65 of the Ordinance thereby extending the period of limitation. It was next submitted that mentioning of section 23(1) does not‑ invalidate the assessment proceedings otherwise legally taken.
3. The learned counsel for the assessee on the other hand contended that notwithstanding the Promulgation of the Income‑tax Ordinance,1979 the assessment proceedings could be re‑opened under the repealed Income‑tax Act as the assessment years under consideration ended before 30th June, 1979 and as such notice under section 65‑ of the Ordinance could not be issued. This contention is misconceived. Section 166(2) (b) of the Ordinance covers the situation which has arisen in this case. The relevant provision is reproduced below:
(a) .....................
(b) Where a return of income is filed after the commencement of this Ordinance otherwise than in pursuance of any notice under section 34 of the repealed Act, by any person for any assessment‑year ending on or before the thirtieth day of June 1979, the assessment of the person for that year shall be made in accordance with the procedure specified in this Ordinance."
From a plain reading of the above clause it is clear that in order to bring the case within the ambit of the Ordinance, the following conditions are to‑ be fulfilled :
(1) Return is filed after the commencement of the Ordinance;
(2) The return has been filed otherwise than in pursuance of any notice under section 34 of the Repealed Income‑tax Act;
(3) The period of assessment is for any assessment year ending on or before the thirtieth day of June, 1979.
4. If these conditions are fulfilled then the assessment has to be made in accordance with the procedure laid down in the Income‑tax Ordinance. In the present case all the three conditions are fulfilled and therefore, the case is covered by this clause. Thus, the procedure applicable in this case would be as laid down in the Income‑tax Ordinance, the limitation provided under section 34 of the repealed Income‑tax Act has no application on the facts and in the circumstances of this case This situation is even otherwise saved by section 166(2)(c) (ii) of the Ordinance which reads:‑
"(ii) any income chargeable to tax had escaped assessment, or had been under assessed or assessed at too low a rate, or had been the subject of excessive relief or refund or the total income or the total world income and the tax payable had been determined under subsection ‑ (1) of section 23 of the repealed Act and no proceedings under section 34 of the said Act in respect of any such income are pending at the commencement of this Ordinance a notice under section 65 may be issued with respect to that assessment year and all the provisions of this Ordinance shall apply accordingly."
5. Since admittedly the income had escaped assessment, which was chargeable to tax, therefore, the notice under section 65 of the Ordinance had to be issued.
6. It was next contended by the learned counsel that section 65 of the Ordinance is applicable only in cases were some kind of assessments have already been made. This contention was made on the strength of the title of the section where the words 'Additional assessment' have been mentioned. Again this content in is devoid of any force. Firstly the title of a section is not part of the law contained in the section. It has been laid down in Nawab Ali v. State P L D 1962 Kar. 269 that title of section does not modify its meaning. Secondly, if the interpretation of the learned counsel is accepted then clause (a) of section 65(1) becomes redundant as the cases on which some kind of assessment has already been made are covered by clauses (b) and (c). No provision can bed interpreted in such a manner, which would make part of the law as redundant. This plea of the learned counsel has also no force and is, therefore, rejected.
7. It was next argued that even if the proceedings under section 65 of the Income‑tax Ordinance had been legally taken, no notice under section 56 could be issued as under that section notice for filing of return could be issued in regard to the cases under the Income‑tax Ordinance only. It was submitted that under section 34 of the Repealed Income‑tax Act corresponding to section 65 of the Ordinance, it was specifically provided that a notice for filing return could be issued under that section. No corresponding power has been provided under section 65. This contention again has no force as section 65(1) does empower the I.‑T.O. to issue a notice to the assessee "containing all or any of the requirements of a notice under section 56 " By this provision section 56 of the Ordinance has been made applicable and, therefore, the I.‑T.O. is competent to issue notice for filing a return.
8. Last contention of the learned counsel for the assessee was that even if all the proceedings are assumed to be legally correct under the Ordinance, even then the assessment order was illegal as it was under section 23(1) of the. Repealed Income‑tax Act. Regretfully I again cannot accept this view of the learned counsel for two reasons. Firstly, section 8 of the General Clauses Act lays down that if an enactment is repealed and re‑enacted any reference made to the repealed Act would be construed as reference to the new Act. Therefore, the' reference made to section 23(1) would be deemed to be a reference to section 59(1) which is the corresponding provision in the new Ordinance. The learned counsel however contended that under section 166 only sections 6 and 24 of the General Clauses Act have been made applicable which means that other provisions of the General Clauses Act are not applicable. This contention is not correct as General Clauses Act is applicable to all Central Acts. Section 166(2) of the Ordinance while making saving provisions only provided that :
"Notwithstanding the repeal of the Income‑tax Act, 1922 (XI of 1922) and without prejudice to the provisions of sections 6 and 24 of the General Clauses Act, 1897 (X of 1897) ..........
(a) "
It is thus clear that the savings made under section 166(2) of the Ordinance are in addition to the savings provided by sections 6 and 24 of the General Clauses Act. It is incorrect to say that only these two sections of the General Clauses Act, 1897 have been made applicable. Various clauses in section 166 of the Ordinance have been made without prejudice to the provisions of sections 6 and 24 of the General Clauses set This does not mean that other provisions of the General Clauses have been excluded from the application.
The other reason for not accepting this argument of the learned counsel is that mere misquotation of any ‑provision of law does not invalidate any proceeding. Section 155 of the Income‑tax Ordinance also saves such mistakes and omissions. Unless it could be shown that the assessee has been prejudiced because of the misquotation of any provision of law, he cannot agitate that mere misdiscription of a law would invalidate the assessment order. If any authority is needed PLD 1960 Lah 770 may be referred.
10. For the foregoing reasons I find that the order of the learned A. A. C. is not legally correct, since the learned A. A. C. had accepted the appeals on technical grounds only and did not go into the merits, his order is set aside and it is ‑directed that the appeals be now decided on merits.
M. B. A. Case remanded.