COMMISSIONER OF INCOME-TAX vs MUHAMMAD KASSIM

1. SAIYED SAEED ASHHAD, J.---The Income Tax Appellate Tribunal by its order, dated 3-1-1990 in Reference Application No.46/HQB of 1987-88 at the request of the Respondent/Assessee had referred a question of law to this Court for its opinion which had arisen out of the Appellate Tribunal's -order, dated 5-2-1987 in I.T.A. 1096/KB of 1983-84. The question of law is as follows: "Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal is justified in cancelling that the addition made under section 4(2d) of the Repealed Act only because two approvals were not obtained from the Inspecting Assistant Commissioner. .

2. We have heard Mr. Shaikh Haider, learned counsel for the Applicant/Department and Mr. Sirajul Haq, learned counsel for the Respondent/Assessee.

3. The facts in brief requisites for the disposal of this Reference Application are that in framing the assessm ent for the assessm ent year 1977-78 the Income-tax Officer had made addition of a sum of Rs.5,04,450 under section 4(21) of the Repealed Income-tax Act, 1922 to the declared income of the Respondent/Assessee. The above addition of Rs.5.04.450 was by enhancement of the value of the property in dispute, the value of which was declared by the Respondent/Assessee at Rs.3,40',240. The Income-tax Officer considered the declared value to be on the lower side and appointed a valuer to assess the value of the said property. The valuer assessed the value of the said property at Rs.8,25,450 which necessitated the addition of Rs.5;04,450. This addition was made, by the Income-tax Officer after obtaining prior approval of the Inspecting Assistant Commissioner.

4. The grievance of Respondent/Assessee is that under section 4(2d) of the Repealed Income-tax Act, 1922 the Income-tax Officer was required to obtain two separate approvals from the Inspecting Assistant Commissioner. According to Mr. Sirajul Haq, learned counsel for the Respondent/Assessee, the Income-tax Officer was required to obtain the approval from the Inspecting Assistant Commissioner before confronting the Respondent/ Assessee with the proposed addition of Rs.5,04,450 to the declared value of the said property and the second approval was to be obtained when the Income-tax Officer not feeling satisfied with the explanation advanced by the Assessee with regard to proposed addition, intended to and proceeded to make the proposed addition in the declared value of the property in dispute.

5. Mr. Sirajul Haq, further submitted that the requirement of two approvals is. Absolutely clear and unambiguous and from a bare perusal of section 4(2d) of the Repealed Act, it is absolutely clear that two approvals were required to be obtained before any addition could be lawfully and validly made. He further submitted that non-observance or violation of the provisions of .Section 4(2d) of Repealed Act in not obtaining two prior approvals before making the proposed additions would render the order as illegal, of no consequence arid it could not be sustained.

6. Mr. Shaikh Haider, learned counsel appearing on behalf of Applicant/Department submitted that before making the addition in the declared value of the said property, the Income-tax Officer had brought the fact of declaration of low value by the Respondent/Assessee to the knowledge of the Inspecting Assistant Commissioner and had sought his permission to make an addition of the proposed sum of Rs.5,04,450 and further submitted that sanction or approval accorded by the Inspecting Assistant Commissioner to Income-tax Officer in making addition of Rs.5,04,450 to the declared value of the said property would automatically result in approving the action of the Income-tax Officer of getting the value of the property in dispute determined by the valuer and later confronting the Respondent/Assessee with the same for justification for making the addition.

7. The contention advanced by him is without any substance. If the contention advanced by Mr. Shaikh Haider is to be adopted then it would render the provision of section 4(2d) of the Repealed Act relating to prior approval of the Inspecting Assistant Commissioner before confronting the Assessee for making the proposed addition as redundant and surplus. It is a well---established principle of interpretation of statutes that no provision of an enactment is to be treated as redundant or surplus and has to be given its meaning and effect to. Reliance for the above is placed on the case of Messrs V.N. Rakhan n & Company v. M.V. Lakatoi Express and 2 others, reported in PLD 1994 SC 894. The contention advanced by Mr. Shaikh Haider is also not tenable in view of the fact that the language used in section 4(2d) of the Repealed Act would be incapable of an interpretation other than the one according to which two separate prior approvals of Inspecting Assistant Commissioner would be required to be obtained by the Income-tax Officer while proceedings to make addition to the declared value, of any valuable propert4. Even supposing that the language used in section 4(2d) was ambiguous, doubtful and indefinite and was capable of different interpretation or meanings or from the same it could not be definitely established that two prior approvals were necessarily required or whether merely obtaining the second approval would fulfil the requirement of section 4(2d) of the Repealed Act than the interpretation favouring the requirement of two approval would have to be adopted .As obtaining of two prior approvals by the Income-tax Officer for making any addition to the declared income or enhancing the value of a declared valuable property would be more beneficial and advantageous to the Respondent/Assessee as it would act as a safeguard or a restraint on the arbitrary and whimsical action of the Income-tax Officer in enhancing or increasing the value of a valuable property/asset.

8. The course of action would be necessitated because of the well-established principle of interpretation of fiscal statutes that if there is any doubt or ambiguity in the language used in the statute which renders it capable of several interpretations, then the interpretation favourable to the Assesee or the citizen is to be adopted. Reliance for the above is placed on the case of M/s B.P.

9. Biscuit Factory Ltd. v. Wealth Tax Officer, reported in 1996 SCM R 1470.

10. It will also not be out of place to refer to section 13 of the income Tax Ordinance, 1979, the provisions of which are similar and analogous to the provisions of section 4(2d) of. Repealed Act. Section 13,of the Ordinance before its amendment by the Finance Act, 1992, provided for two separate and independent approvals of Inspecting Assistant Commissioner in the case where the Income-tax Officer intended to make any addition to the declared income of Assessee by way of enhancement or increase in the value of any property. The first approval was provided by subsection (2) of section 13 and the second approval was provided in by the second proviso to clause (e) of section 13(1) of the Ordinance. The Income-tax Ordinance was promulgated on, 1-7-1979 and the aforesaid provision relating to two prior approvals of the Inspecting Assistant Commissioner for making additions on the basis of enhancement/re-determination of the value of any property or valuable article continued to be operative and remained in force till 1992 when by the said Finance Act, 1992, the provision for obtaining the first approval required by subsection (2) of section 13 of the Ordinance was deleted.

11. Upon the above discussion, we have no doubt in our mind that section 4(2d) of the Repealed Act postulated two separate and independent approvals of Inspecting Assistant Commissioner for making addition to the declared income of an Assessee by way of enhancement/increase in the value of any valuable article or property. In the case in hand the Income-tax Officer had not obtained the approval of the Inspecting Assistant Commissioner before confronting the Respondent/Assessee with the proposed addition of Rs.5,04.450 to the value of the property in dispute. The contention of Mr. Shaikh Haider, learned counsel for the Department; Applicant that in this case the prior approval of Inspecting Assistant Commissioner was not required to be obtained for confronting the Respondent/Assessee with the proposed addition of Rs.5,04,450 as the value of the property had been got determined by an expert/valuer which not being an arbitrary estimate or guess work of the Income-tax Officer, did not require prior approval of the Inspecting Assistant Commissioner is not tenable.

12. We are unable to accept the aforesaid contention as the words used in section 4(2d) of the Repealed Act did not make any provision for not obtaining the prior. Approval of the Inspecting Assistant Commissioner before confronting the Assessee with the proposed addition provided that the value of any article or the property in dispute was got determined by an expert or a valuer.

13. Acceptance of the aforesaid contention would result in reading or adding words in section 4(2d) of the Repealed Act and subsection (2) and clause (c) of section 13 of the Ordinance, which is not permissible. A Court while interpreting a provision of the statute has to read the provision as it exists and to deduce or infer the meaning in accordance with the existing text or the words of the particular provision. The Court is not authorized to add to or subtract any word(s) from any provision of a statute while interpreting a provision of a statute so as to give it a meaning other than the one which obviously and plainly flows or can be inferred. For the above proposition we have placed reliance on the pronouncement made by the Supreme Court of Pakistan and Sindh High Court in the case of (i) A & B Food Industries Limited v. Commissioner of Income-tax reported in 1992 SCM R 663 and (ii) Iqbal Muhammad Khan v. Sindh Labour Appellate Tribunal, reported in 1992 PLC 549 respectively.

14. The Income-tax Officer had not proceeded in accordance with the provision of section 4(2d) of the Repealed Act and the addition made by him to the declared income of the Assessee being illegal and ultra vires was rightly set aside by the Appellate Tribunal and we do not find any reason to interfere therewith.

15. Accordingly this Reference Application is dismissed. The question referred to us is answered in the affirmative and the Order of the Appellate Tribunal is confirmed.