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I.T.As. Nos. 408 and 409 (IB) of 1985-86, decided on 29th April, 1987.

---Ss. 166(2)(G, 66 6 2(2)--Assessment in respect of 'charge years 1975-76 and l976-77 initially made before coming into force of the Ordinance of 1979--Returns in respect of charge years 1975-76 and 1976-77 having been filed before the commencement of the Ordinance, provisions of S. 66 were not attracted in respect of assessments of the said years--No period of limitation was prescribed under Act, 1922 for making of re-assessment, which could be made at the option of the Income-tax Officer as and when he liked--Re-assessment framed for the charge years 1975-76 and 1976-77 were not hit by the period of limitation as contemplated by S . 66.

Maqbool Hussain Shah, D.R. for Appellant.

Nemo for Respondent.

Date of hearing: 29th April, 1987.

These two appeals of the department were earlier refixed for disposal on 8-4-1987. However, at the request of Mr. U.D. Qureshi, I.T.P. both the appeals were adjourned to 29-4-1987, vide order sheet entry No. 3, dated 8-4-1987. This fact was duly noted by him and learned D.R. in the marginal space of the order sheet relating to I.T.A. No. 408 (IB)/85-86. Today learned counsel for the respondent has neither cared to attend nor has filed any application on behalf of the assessee requesting for another date. In this view of the matter, both the departmental appeals are taken up for disposal on merit.

2. These two appeals on behalf of the department are directed against the impugned order of learned A.A.C. in consequence of which he annulled assessments relating to the charge years 1975-76 and 1976-77.

3. Brief facts giving rise to these appeals are that assessments for the charge years 1975-76 and 1976-77 according to information provided by learned D.R. were initially made before coming into force of the income-tax Ordinance, 1979 (hereinafter called the Ordinance). These assessments according to learned A.A.C's. order, dated 15-1-1986, were set aside by his predecessor-in-office on 33-9-1979. In consequence thereof, re-assessments were made under section 23(4) read with section 31 of the repealed Income-tax Act, 1922 hereinafter called the Act) on 18-6-1983. These assessments for the charge years 1975-76 and 1976-77 were again contested in appeal and were annulled vide order Nos. 28 and 283, dated 15-1-1986. The department, therefore, filed second appeals before the Tribunal for the redress of its grievance on the following ground:,

"That in accordance with the provisions of section 166(d) read with section 2(7) of the Ordinance, assessments made in respect of the charge years 1975-76 and 1976-77 under section 23(4) read with section 31 of the Act did not attract the provisions of section 66 of the Ordinance ibid."

4. The department by virtue of letter No. 02-05-0216904/80-81/ Misc/6, dated 12-4-1984, had raised an additional ground which is set out below for facility of reference:--

"That in accordance with section 166(2)(a) read with section 2(7) of the Ordinance, assessments made by the Income-tax Officer for the charge years 1975-76 and 1976-77 under subsection (4) of section 23 read with section 31 of the Act did not attract the provisions of section 66 of the Ordinance ibid.

5. Since question raised by the department is of a legal character, I have allowed it to be agitated before me by learned D.R.

6. Learned D.R. to begin with has stated that in this case assessments relating to the charge years 1975-76 and 1975-77 were initially made before coming into force of the Ordinance. This fact in the absence of Mr. U.D. Qureshi, I.T.P. learned counsel for the respondent has remained uncontroverted. On account of the foregoing fact, learned D.R. has pointed out that, in accordance with the provisions of section 2(7), re-assessments were not controlled by section 66 of the Ordinance. He has submitted that instead reassessments could be made in accordance with the provisions of section 166(2)(a) of the Ordinance. However, he has not placed reliance on clause 2(d) of section 166 in support of the fact that period of limitation as contemplated by section 66 of the Ordinance was not relevant in respect of reassessments made for the charge years 1975-76 and 1976-77 by virtue of Income--tax Officer's Order dated 18-6-1983.

7. After hearing learned D.R. and perusing the record before me, I find that learned A.A.C. in annulling assessments, relied on C.B.R's Circular No. 4 of 1979, dated 23-8-1979 and section 66 of the Ordinance. In so far as the said circular is concerned its para. 20 is set out below:--

"Provisions of this section are similar to those contained in section 34 of the repealed Act. However, a new provision has been made in respect of the assessments set aside in full or in part by the Appellate Assistant Commissioner or the Tribunal. Where no further appeal has been filed against such order', re-assessment shall be completed within one year from the end of the financial year in which such order is received by the Income-tax Officer. Previously, there was no time limit on completion of set aside assessments. The provision has been inserted to remove the genuine grievance of the assessees that set aside assessments were not finalized expeditiously."

8. The relevant part of Circular No. 4 as set out above, merely explained provisions of section 66 of the Ordinance. However, the said circular is not relevant in respect of assessment years 1975-76 and 1976-77 as these were made before coming into force of the Ordinance. On account of the same reason, section 66 stands excluded for the purpose of determining period of limitation in respect of assessments made by the Income-tax Officer for the charge years 1975-76 and 1976-77 vide order dated 18-6-1983. In arriving at this conclusion, I have drawn support from section I6fi(2)(a) of the Ordinance, which is given below for facility of reference:--

"(2) Notwithstanding the repeal of Income-tax Act, 1922 (XI of 1922) and without prejudice to the provisions of section 6 or section 24 of the General Clauses Act, 1897 (X of 1897):--

(a) where a return of income has been filed before the commencement of this Ordinance by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Ordinance had not come into force;

9. On account of the observation made in paras. 3 and 6, it is now settled that assessments in respect of the charge years 1975-76 and 1976-77 were initially made before coming into force of the Ordinance. Therefore, it can rightly be concluded that returns in respect of the charge years 1975-76 and 1976--77 were filed before the commencement of the Ordinance. Based on this reason, it can be said that provisions of section 66 of the Ordinance were not attracted in respect of assessments under consideration as these were required to be finalized under the Act. In other words, as under the Act, no period of limitation was prescribed for ma king of re-assessments, these could be made at the option of the Income-tax officer as and when he liked. Therefore, re-assessments framed by virtue of income-tax Officer's order dated 18-6-1983, for the charge years ' 1975-76 and 1976-77 were not hit by the period of limitation as contemplated by section 66 of the Ordinance. On account of the foregoing reasons, learned A.A.C's. order dated 15-1-1986, is vacated and that of the Income-tax Officer dated 18-6-1983 is restored.

M.B.A./395/T Order accordingly.

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