THE COMMISSIONER OF INCOME-TAX, LAHORE vs Messrs IMMION

ORDER

NASIM SIKANDAR, J.---The assessee-respondent in this reference is an individual and at the relevant time, derived income from wholesale business of electronic goods. For the assessment year 1985-86, he returned an income of Rs.60,000 under Self-Assessment Scheme claiming immunity from detailed scrutiny. The Assessing Officer, however, refused the claim on the ground that the assessee had himself shown a capital of Rs.1,40,000 against import licence of Rs.5,79,200.

Since the assessee failed to participate in the proceedings best judgment assessment at Rs.4,60,000 was framed on 23-6-1986. In appeal ex parte proceedings were found unjustified and therefore , the case was remanded. On further appeal, however, the learned Tribunal held that return income needed to be accepted under Self-Assessment Scheme: Earlier it was found that the provisions of the Self-Assessm ent Scheme had to be liberally interpreted and that once the assessee had returned enhanced income to avail the facility of immunity as a bargain his return could not have been plucked out of the Scheme.

2. Thereafter, at the instance of the Revenue, the Lahore Bench of the Income-tax Appellate Tribunal framed following questions for our consideration and answer:-

(1) Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the case was wrongly set apart for assessment under normal law?

(2) Whether on the facts and circumstances of the case, the Tribunal was justified in directing that assessee's return may be accepted under Self-Assessment Scheme despite the fact that this was a case of concealment because the assessee suppressed his working capital investment in Imports?

3. Learned counsel for the Revenue has attempted to make out a case that the Revenue was justified in refusing claimed immunity in the light of para. No.9 of the Self-Assessment Scheme notified for the assessm ent year 1985-86. Therefore, seeks a negative answer to both questions.

However, we are of the view that neither of the two questions raises a substantial legal controversy.

It is the case of an individual-assessee who was found ineligible to avail the benefit of the Scheme in the concerned year while the Tribunal held that he was so entitled. In the case of an individual- tax payer when the question framed remains absolutely personal to and revolves only around the facts of that case in that very assessment year, no substantial question of law can be said to have arisen. In other words where the answer to a question is applicable to a certain assessee only in a particular year and is not of general application, a reference to this Court need not be made.

4. The Scheme of the Income Tax Ordinance, 1979 (and the late Income-tax Act, 1922) contemplates a reference on a question which is of general interest and importance. An isolated issue which is neither of general recurrence nor its determination would be applicable to other assessees cannot be said to be a substantial question of law. The purpose of reference under the aforesaid provisions, it will be seen is not merely the resolution of a legal controversy between the Revenue and an assessee, it is also for the future guidance of the Revenue to deal with the matter in a particular manner. An assessee will also be guided for its future assessments if a particular issue is decided for or against him to determine if it is to make a particular claim in a particular set of facts or is to refrain from making a particular expense in a particular manner. For the assessee also the purpose of reference is not only the resolution of an existing controversy but also its future guidance. Where, however, none of these purposes is to be served, a reference to this Court need not be made and the matter should conclude with the decision of the Tribunal. An answer by this Court or the opinion expressed should not merely add some more pages to the file of an assessee.

Such opinion, generally speaking, must be to the interest of all those involved in the assessment process, the Assessing Officer, the First Appellate Court and the Tribunal as an extra-departmental or the judicial forum. The opinion so expressed should normally enable all of them to avoid unnecessary pleas in future and to restrict litigation.

5. The Supreme Court of Pakistan in re: The Lungla (Sylhet) Tea Co. Ltd. v. Commissioner of Income- tax, Dacca Circle, Dacca 1970 SCM R 872 held that every question of law need not be referred to the High Court. Also that only a question having some substance needed to be so referred. These words of the apex Court appear to have been adopted by the Indian Legislature while conferring appellate jurisdiction on the High Courts by Finance (No.2) Act, 1998. Subsection (1) of section 260A inserted in the (Indian) Income Tax Act, 1961 states: "An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law". The word "substantial" according to Black's Law Dictionary sixth Edition page 1428, inter alia means", of real worth" and "Importance". A reference, as a matter of course, to the High Court has never been the intention of law either under the late Act, 1922 or section 136 of the Ordinance, 1979.

6. It has been our experience that the Revenue in case of an adverse decision invariably goes for an application for reference to this Court and is generally well-obliged by the Tribunal. The Revenue, the assessees as well as the Tribunal need to understand the precise nature of the jurisdiction of this Court as also the purpose for which it has been conferred. Without an iota of doubt this jurisdiction is advisory in nature and is required to be invoked only when the issues raised before and decided by the Tribunal were of substantial nature and of general application to a sizeable class of assessees. The nature of jurisdiction of this Court is clearly distinguishable from its appellate or the revisional jurisdiction. The most important difference which needs to be noted is that during the pendency of a reference the appeal before the Tribunal is deemed pending and in case the view adopted by the Tribunal is varied it is again listed before them and then decided in the light of the opinion expressed by this Court. The purpose of reference is not to get a decision for or against a party before the Tribunal. It is only the resolution of a problematic or debatable legal question. In re: C.I.T. v. Basanta Kumar Agarwalla (1983) 140 ITR 418, their Lordships expressed the view that "A point of law" could not be equated with the expression "question of law" and that the question referred must be a disputed or disputable question of law. Further that the object of a reference was to get a decision from the High Court on a problematic or debatable question and not an obvious or simple point of law.

Accordingly, the reply to a question referred to this Court, affirmative or negative, should normally settle a pattern of guidance both for the Revenue as well as the assessee besides the Tribunal who had sought the advice in the first instance. Therefore, the practice on the part of the Revenue or the assessee which at times is aided by the Tribunal to treat this Court as a Court of appeal needs to be disapproved. Factual controversies should not be allowed to be converted into legal issues only by dint of draftsmanship or employment of legal language in a style which is usual to the framing of such questions. In case the Tribunal is not certain if the question framed raises a substantial legal issue, it must refuse to make a reference as in that case the assessee or the Revenue will have to approach this Court under subsection (2) of section 136 and satisfy, before admission, that the question raised/framed is of substance. Therefore, unless a question framed by the Tribunal at the instance of an assessee or the Revenue under section 136(1) or brought directly before this Court under section 136(2) of the Income Tax Ordinance, 1979 fulfils the aforesaid standard of general interest, application and relevancy to the overall assessment proceedings, it shall be deemed to be a question of fact. The principle that an advice should never be given unless asked for also has another angle. With regard to reference proceedings under the Ordinance it means that an advice should not be sought unless it is absolutely necessary for the guidance of the parties and for smooth and effective flowing of the assessment stream.

In the present case the eligibility of individual assessee in a particular year to avail immunity from detailed scrutiny can hardly be said to be a question having substance. The reply to the aforesaid questions will not even be available to the assessee for his future assessments. Having a peculiar background of facts it will not be of any importance for the Revenue or other assessees either. The principle settled in replying the questions will not be of general application even to answer the parameters of the Self-Assessm ent Scheme for the year.

That being so, we will hold that both the questions as framed are not questions of substance to be referred to this Court. Therefore, we will refuse to answer them.

Answer declined.