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Petitioner: AI3DUR RASHID VS Respondent: SPECIAL JUDGE, CENTRAL. LAHORE AND ANOTHER-s
Court Name: Lahore High Court Judge(s): Aftab Hussain Title: AI3DUR RASHID vs SPECIAL JUDGE, CENTRAL. LAHORE AND ANOTHER-s Case No.: Writ Petition No, 1396 of 1973 Date of Judgment:1976-01-25 Reported As: PLD 1977 Lahore 145 Result: Petitions dismissed
JUDGMENT
JUDGMENT ' This order will dispose of Writ Petitions Nos. 1396/1973, 2139/073, 1002/1974 and 1532/1974 since the facts and some of the points of law are common. The crucial point involved in all the four cases is whether the prosecution of the petitioners for an offence under sections 51(2) and 52 of the Income-tax Act launched on a complaint made by an Income-tax Officer to whom the cases of the petitioners have been transferred after the decision by an Income-tax Officer of a different circle is legal in view of the provisions of subsection (2) of section 54-A of the Income-tax Act which provides that the complaint can be made by an Income-tax Officer "who is competent to make assessm ent under this Act in the case to which the offence alleged to have been committed relates". In one of the cases i,e, Writ Petition No, 1532/1974 some additional points also rise. 2. Writ Petition No, 1002/1974 is liable to be dismissed since this point does not arise in that case. It is conceded in para. 3 of the petition that the complaint was lodged by the same Income-tax Officer who had passed the order of re-assessment of Income-tax and had issued notice under section 28(3) of the Income-tax Act for levying a penalty against the petitioners in that case. Before dealing with the points involved in other cases, however, it will be necessary to give briefly the facts of these writ petitions. 3. The facts in Writ Petition No, 1396/1973 are that a return for the assessment year 1971-72 was filed by the petitioner on 23-8-1971 in A-Circle, Lyallpur. The assessment was finalised by the Income-tax Officer of that Circle on the 3rd of April, 1972. The petitioner had deposited a sum of Rs, 71,C00 in the Bank which was not disclosed as income in the return. He claimed before the Income-tax Officer that a sum of Rs, 34,300 out of this amount belonged to his brother-in-law Muhammad Younas, Rs, 6.400 belonged to his wife which she had saved from the amount given to her for monthly
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expenses, and the remaining amount was his own which he had deposited in the Bank on account of fear of demonetisation. The I. T. O. Did not accept this explanation and he added the above amount to the total income of the petitioner and assessed him to a sum of Rs , 86,123. He also issued a notice to him under section 28(3) for concealment of this income. Sometimes after the passing of this order, the jurisdiction to deal with this case was transferred by an order dated 27-1- 1973 to the Income-tax Officer (Investigation). The transferee officer filed a complaint against the petitioner for offences under sections 51(2) and 25 of the Income-tax Act. 4. According to the facts given to me by the learned counsel for the petitioner in Writ Petition No, 2139 of 1973, the assessee submitted a return for the assessment year 1971-72 to the Assistant Income-tax Officer, C-Circle, Lahore, showing a total income of Rs, 12,000. It was a no-account case and for this reason the income was computed by the petitioner by applying a percentage of profit on the sales amounting to Rs, 1,40,000. Later on it transpired that certain sales bad not been accounted for in the computation statement. A revised return was, therefore, filed on the basis of estimated sales of Rs, 4,00,000 from the whole-sale business and Rs, 64,000 from the retail business. The expenses were, however, estimated at Rs, 16,720, thus leaving a net profit of Rs, 11,280. On this calculation the estimated profit was declared to be the same sum of Rs, 12,000. The Assistant Income-tax Officer finalised the assessment on 20th of June, 1972. He rejected the estimates of the petitioner. The net income was assessed by him at an amount of Rs, 29,205. A notice under section 28 was issued for disclosing incorrect particulars of income-tax under the self-assessm ent scheme. Thereafter the case was transferred by the Central Board of Revenue to the Income-tax Officer (Investigation), Circle-I, Lahore; who filed a complaint's for offence under sections 51(2) and 52 of the Income-Tax Act before the Special Judge. An objection was taken by the petitioner to the jurisdiction of the Special Judge, but the same was repelled by an order dated 3rd of September, 1972. The petitioner filed a criminal revision petition before the High Court, but the same was dismissed on the ground that the appropriate remedy was to invoke the writ jurisdiction of the High Court. 5. In Writ Petition No, 1532/1974 the facts are that the petitioner is a partner in a partnership firm styled as Fateh Muhammad, Abad Ali, Lyailpur. A return showing the income of Rs, 4,704 was filed by the firm or the period 23-8-1969 to 30.6-1970. The Assistant Income-tax Officer, Circle, Lyallpur registered the firm under section 26-A on 4-9-1970 and sassed it to a total income of Rs, 17,554 vide copy of the order, Annexure A'. Later on a notice under section 34 was issued and as a result of re- assessm ent, the net income was found to be Rs, 55,849. The net income was raised inter alto by addition of Rs, 20,000 alleged to have been deposited n Habib Bank Ltd. In a Savings Bank Account. A notice under section 28(3) of the Income-tax Act was also issued to the petitioner with a view to pose penalty. Thereafter the case was transferred and a complaint for offences under sections 51(2), 52 and 52-A of the Income-tax Act was committed by the Income-tax Officer (Investigation), Circle-I, Lahore respondent No, 2) to the Special Judge, on the basis of sanction of the central Board of Revenue which was communicated on 28-2-1973 under e signature of Secretary (Taxes), Central Board of Revenue. The petitioner raised the following objections before the Special Judge to the guilty of the complaint and the jurisdiction of the Special Judge:- (1) The complainant has no locus standi. (2) There is no valid sanction for the petitioner's prosecution as required by law for the following reasons:- (a) There is no Central Board of Revenue in existence in the eye of law as there has been no Notification in terms of clause (9) of the Pakistan (Adaptation of Existing Pakistan Laws) Order, 1947; (b) that the sanction was not accorded by the Ist Secretary (Taxes), but was signed by somebody else on his behalf which is without lawful authority and of no legal effect;
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(c) that the sanction was in respect of offences under sections 51(2) and 52-A while the complaint is in respect of sections 51(2), 52 and 52-A of the Income-tax Act. (3) The sanction and complaint both relate to Abad Ali c/o Fateh Ali Abad All whereas the accused is Abad Ali c/o Fateh Muhammad Abad Ali. 6. The learned Special Judge found all the objections except objection 2(c) to be without force. He held the trial under section 52 of the Income-tax Act to be incompetent. He, therefore, directed the trial to proceed under sections 51(2) and 52-A of the Act. 7. As stated above, the point which is common in these petitions is whether the complaint for prosecution could be lodged before the Special Judge by an Income-tax Officer to whom the case had been transferred later, after the termination of the proceedings of the assessment or re- assessm ent. The relevant provision is section 54-A subsection (2) clause (a) which requires interpretation. This clause provides that the Special Judge shall take cognisance of and have jurisdiction to try an offence triable under subsection (1) only upon a complaint in writing made by an Income-tax Officer who is competent to make asssesment under this Act in the case to which the offence alleged to have been committed relates. Syed Muhammad Zafar, Advocate, who appeared for the petitioner in Writ Petition No, 1'296/1973 argued this point and his arguments were adopted by the learned counsel in the other petitions. Mr. Zaffar argued that the complaint can be lodged only by an Income-tax Officer competent to make assessment in the case to which the offence alleged to have been committed relates. In a case in which the assessment has already been made, an officer competent to make assessment is the officer who has actually completed the assessm ent. The transfer of jurisdiction after the completion of the assessment will not make the transferee Income-tax Officer competent to make assessment in that case. He also attacked the transfer of a completed case as without jurisdiction. He referred to Bidi Supply Co. v. Union of India (0 for interpretation of the words "a case". In this case the Supreme Court of India bad interpreted the word 'case' as meaning 'a case initiated and completed. He also referred to Dayaldas Khushiram v. Commissioner of Income-tax (Central) (2) and Manordas Khalida, v. G. R. Desai (3) in support of the same proposition. 8. In sub-para. (c) of para. 5 of Writ Petition No, 1396 of 1973 it was alleged by the petitioner that the transfer order of the petitioner's case was passed under section 7-A of the Act. This was controverted in the Departmental Report and it was stated there that the Central Board of Revenue had transferred the case to the Commissioner of Income-tax (Investigation), Lahore who had transferred it under section 5(5) to the Income-tax Officer, Circle IV, Lahore (Investigation). The learned counsel urged that the only provision dealing with the power to transfer any case from one I. T. 0. To another I. T. 0. Is in subsection (7-A) of section 5. This provision envisages the transfer of any case as also any proceedings in respect of case from one Income-tax Officer to another. He argued that the respondents cannot claim the benefit of this subsection for the reasons; firstly that the transfer is not made (as stated in the report) under this provision and secondly that the language of the subsection which appears (I) (1966) 29 I T R. 717 (2) AIR 1940 Bom. 234 (3) (1959) 37 1 T R 302 (Born). wide enough to include even proceeding in respect of any case cannot warrant the transfer of a proceeding after the case is finalised by assessment 9. The learned counsel also drew an analogy between section 54-A of the Income-tax Act and section 195 of the Criminal Procedure Code in which under its sub-clause (a), the jurisdiction to try the offence is subject to a complaint being made by the "public servant concerned". He relied on Meer Ahmad and others v. Nlaz Muhammad and 2 others (1) in which this phrase was interpreted
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as meaning an Officer whose order was contravened. Lastly he relied upon Satrugana Behera and another v. Emperor (2) in which the words "competent to try the offence" were interpreted as meaning "competent to try the same offence". 10. The sum and substance of the arguments of the learned counsel Is that the word 'case' whether used in section 5 or used in section 54-cannot mean a case which has been completed. It could mean only a case which is pending before an Income-tax Officer and requires determination. The authorities relied upon by the learned counsel for the interpretation of 'case' are no longer of any relevance in view of the changes gradually introduced by the Legislature in the relevant law. In Dayaldas Khushiram v. Commissioner of Income-tax (3) Sir John Beaumont. C. J. Observed that "the right to transfer cases or classes of cases in which an assessment has been completed. In such a case the assessee has acquired -certain rights e.g. Of appealing to a particular Assistant Commissioner and of applying for review to a particular Commissioner". In this manner the High Court of Bombay treated only the provision of section 64 regarding plea of assessment but also the form of appeal as a matter of right, although according to the established principle provision of appeal in a Statute is a vested right while the regulation of form of appeal is a procedural matter. However, in view of the emphasis on section 64 wherefrom it was deduced that the assessee has a right to be assessed by the Income-tax Officer of the area having jurisdiction in the place of business of the assessee, subsection (5) was added to section 64 in order to confer inter alia jurisdiction upon Income-tax Officer to whom a case is transferred under section 5(7-A). The same High Court again held after independence in Manordas Kalidas v. G. R. Desai and others (4) that the expression 'cues or classes of cases in subsection (2) of section 5 of the Act did not refer to completed assessm ent. It was further held that a competent assessment, after it had been reviewed by the issue of a notice under section 34, may become a pending case on its re-opening but until then it was not a case within the meaning of section 5(2) of the Act. In Bidi Supply Co. v. The Union of India and others the Supre ne Court of India held that a case is started when notice under section 22(2) is issued calling upon the assessee to file the return of his total income during the previous year. These notices and return are to be confined to a particular assessment year, and subsection (7) of section 5 contemplates the transfer of such a case I e. The assessment case for a particular year. It was held that subsection (7-A) of section 5 did not contemplate a transference of case which might arise in future. This last case of Indian jurisdiction cannot be helpful in view of the addition to the explanation to subsection (7-A) of section 5 of the words 'and includes all proceedings under this Act which may be commenced (I) PLD 1972 Pesh. 128 (2) AIR 1944 Pat. 328 (3) AIR 1940 Boni. 234 (4) (1959) 37 I T R 302 after the date of such or direction in respect of any year', thus rendering' it permissible to transfer or deal with cases which might arise in future. 11. The word 'case' in section 5 of the Act has recorded statutory interpretation in the explanation to subsection (7-A) of section 5 in the following manner:- "In this section, the word 'case' in relation to any person whose name is specified in an order or any direction issued thereunder, means all or any proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." The words underlined by me clarify that the word 'case' for the purpose of distribution or allocation of business as well as transfer from one Income-tax Officer to another, includes even a case which has been completed. In view of this interpretation clause added to section 5, the authorities
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referred to by the learned counsel are not at all relevant. This finding disposes of Writ Petitions Nos. 1396/1973 and 2139/1973. 12. The argument about their being any analogy between section 195 (1)(a), Cr. P. C. And the words of clause (a) of subsection (2) of section 54-A, Income-tax Act is fallacious. Clause (a) of subsection (1) of section 195, Cr. P. C. Requites initiation of criminal proceedings in certain cases on the complaint of 'the public servant concerned'. Section 54-A, Income-tax Act provides for a complaint not by the Income-tax Officer concerned but an Income-tax Officer competent to make assessm ent in the case to which the offence alleged to have been committed relates. 13. In Writ Petition No, 1532/1974 Mr. Javed Hashmi, Advocate, raised a number of other objections. Firstly he argued that the Central Board of Revenue whose approval is necessary for launching a prosecution vide section 54 of the Income-tax Act is not and has never been legally in existence in Pakistan since there has been no Notification in terms of clause (9) of the Pakistan (Adaptation of Existing Pakistan Laws) Order, 1947. 14. In order to appreciate this point, it is necessary to refer to the provisions of the Central Board of Revenue Act, 1924. This Act authorised the Central Government to constitute a Central Board of Revenue consisting of one or more persons and to appoint the members thereof. It provided that the Board shall be subject to the control of the Central Government in the exercise of such powers and the performance of such duties as may be entrusted to it by that Government or by or under any law. The Central Board of Revenue which initially consisted of two members was constituted by the Governor-General-in-Council on the 29th of March, 1924 vide Gazette of India, Part I, page 256. 15. From the 15th of August, 1947, two independent dominions were set up in India which were known as 'India and Pakistan'. In order to set up these two independent dominions, the British Parliament enforced the Indian Independence Act, 1947 which made provisions inter alia for matters consequential on or connected with the setting up of the dominions. Section 18(3) of the Act provided that except as otherwise expressly provided in the Act, the law of British India and of the several parts thereof existing immediately before the appointed day (I.e. 15-8-1947) shall so far as applicable *[Here In italics] and with the necessary adaptation continue as the law of each of the new dominions and the several parts thereof until other provision is made by laws of the Legislature of the dominion in question or by any other Legislature or other authority having power in that behalf. In order to make adaptations in exercise of the powers conferred by section 18(3) of the Indian Independence Act, the Governor-General of Pakistan issued on the 14th of August, 1947 Order No, 20 known as the Pakistan (Adaptation of Existing Pakistan Laws) Order 1947. Clause (2) of this Order defined 'Existing Pakistan Law' as meaning Inter alia any Act or rule which immediately before the 15th of August 1947 had the force of law in the whole or any part of the territories which from that date formed the territories of the Dominion of Pakistan. Clause (9) provided that any reference in an existing Pakistan Law to a tribunal, authority, officer, or official body whose jurisdiction or authority immediately before the 15th of August, 1947 extended to the whole of British India or over parts of British India which on the said date fell partly within the Dominion of India and partly within the Dominion of Pakistan shall be construed as reference to such tribunal, authority, officer or official body as the appropriate Government may by Notification in the official Gazette constitute or appoint in that behalf and any such direction may be given so as to have retrospective effect from 15-8-1947. 16. The argument of Mr. Javed Hashmi, Advocate, is that in view of the provision of clause (9) it was incumbent upon the Government of Pakistan to constitute the Central Board of Revenue by a Notification in the official Gazette. He stated that no such notification was ever issued by the Government constituting the Central Board of Revenue and for this reason the existing Board of
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Revenue cannot be deemed to be legally constituted. Section 53 of the Income-tax Act provides that a person shall not be proceeded against for the offeuces under section 51, 52 or 52-A of the Act except with the approval of the Central Board of Revenue. Since there is no legally constituted Central Board of Revenue, he argued, the approval for the prosecution of the petitioner given by the illegally constituted Central Board of Revenue is a nullity and cannot give jurisdiction either to the Income-tax Officer to make a complaint against the petitoner in Writ Petition No, 1532/1974 or to the Special Judge to try the same. 17. Mr. Ilyas Khan, Advocate, who appeared for the respondents argued that the objection about the constitution of the Central Board of Revenue should in the first instance have been raised at the time of assessm ent before the Income-tax Officer since this objection has the effect of calling in question the assessm ent and the appointment of other authorities under the Income-tax Act including the Income-tax Officer who can be appointed by the Central Board of Revenue. On merits he argued that the Central Board of Revenue had already been constituted in British India in the year 1924 and that authority, therefore, existed as a Department of the Government of India. It was not, therefore, necessary to constitute another Board of Revenue. Only appointment of a member was required to be made under the provisions of clause (9) of Governor-General's Order No, 20 and this appointment had been made on the 29th of August, 1947 to have effect retrospectively from 15th August, 1947. He referred to the following Notification published in the Gazette of Pakistan of August 29, 1947 Part I:- "No, 3.-Mr. J. B. Sherer, 0. B. E., I. C. S. Is appointed Joint Secretary to the Government of Pakistan, Ministry of Finance (Revenue Division), and Member, Centeral Board of Revenue with effect from the 15th August, 1947. ' Mr. A. A. Burney is appointed Deputy Secretary to the Government of Pakistan, Ministry or Finance (Revenue Division) and First Secretary, Central Board of Revenue with effect from the 15th August, 1947. ' Mr. Zafar Ullah is appointed Under Secretary to the Government of Pakistan, Ministry of Finance (Revenue Division) and Second Secretary, Central Board of Revene with effect from the 15th August, 1947. ' Mr. L. G. O. Leary is appointed Specialist Officer, Central Board of Revenue with effect from the 15th August, 1947." 18. Confronted with this Notification Mr Javed Hasimi shifted his stand and raised a point which was not taken in the writ petition. He argued that Mr. J. B. Sherer was appointed by this Notification as Member, Central Board of Revenue by Mr. V. A. C. Turner, Secretary to the Government of Pakistan under whose signatures the Notification was issued, and not by the Governor-General who was the only competent authority to make the appointment on behalf of the Central Government. He referred to the definition of the term "Central Government" in the General Clauses Act, 1897. There it is defined as meaning the Gnvernor-General. He stated that the Notifications of appointments of successive members were couched in the same language and were open to the same objection. He also relied upon section 17 of the Government of India Act which provided that all executive actions shall be expressed in the name of the Governor-General and urged that the Notification of appointment having not been expressed in the name of the Governor-General it cannot prove that the appointment was made by the Governor-General. He relied upon Sind Barlcks Syndicate v. Tuhilrumani and another, (1) and Qamar-uz-Zaman Khan v. Punjab Province (2) for his argument that the provision of section 17, Government of India Act was mandatory. By way of analogy he referred to some cases under section 175 of the Government of India Act which took the view that the provision of that section that all contracts made in the Executive Authority of the Federation shall be expressed to be made by the Governor-General, was mandatory. The learned counsel argued that the principle of these authorities can be pressed into service since the language of
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sections 17 and 175 was similar. These cases are Muhammad Hasham Khan v. Provincial Government, N.-W. F. P. (3)., Qamar-uz-Zaman Khan v. Punjab Province and others, Province of West Pakistan v. Mind & Patel Co. (4), Federation of Pakistan v. Amin Agencies (5), LaClaire Pakistan Corporation v. Islamic Republic of Pakistan (6). He urged that where an Act provides for certain thing to be done in a particular manner, it must be done in that manner or not at all and if the appointment is not by a Notification where it is required to be made in that manner, the appointment cannot be deemed to be legal. He referred to Muhammad Aslam v. The Commissioner (7) Qadar Dad and others v. Sultan Bibi and another (8) and Muhammad Sharif v. Muhammad Rafique etc. (9). (1) PLD 1956 Kar. 305 (2) PLD 1956 Lab. 612 (3) PLD 1950 Pesb. 13 (4) PLD 1959 Kar. 782 (5) PLD 1957 Kar. 663 (6) PLD 1957 Kar. 2E5 (7) PLD 1949 Lab. 164 (8) PLD 1956 FC 129 (9) PLD 1968 Lah. 263 19. Mr. Ilyas Khan raised preliminary objections in regard to this point also and argued that Mr. Javed Hashmi could not be allowed to urge this point for several reasons. He objected that this is a new point which also involves a question of fact. It was raised neither before the Special Judge in the objections raised there, nor before this Court in the writ petition. He referred to various authorities in this connection to which it is unnecessary to refer since it is an established proposition of law that a person cannot be allowed to make out a new case which involves question of fact at the arguments stage of a writ petition. He also contended that the objection…
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