Mr. M. Tariq Prop: M/s Tariq Food. (2022) 125 TAX 403 = 2020 PTD 2189

APPELLATE TRIBUNAL INLAND REVENUE, BENCH-1, ISLAMABAD

ITA No.414/IB/2015

(Tax Year 2012)

******

Mr. M. Tariq Prop: M/s Tariq Food Q-4, Gol Chowk, Pani Wali Tancky, New Scheme Mohanpura, Rawalpindi.		Appellant
	Vs
The Commissioner Inland Revenue, Zone-II, RTO, Rawalpindi.		Respondent
Appellant by		Mr. Muhammad Bilal Uddin Butt, Adv.
Respondent by		Mr. Zaheer Qureshi, DR
Date of hearing		10.02.2020
Date of order		10.02.2020

O R D E R

M. M. AKRAM (Judicial Member):    This appeal has been filed by the appellant/taxpayer against an order No.358/2014 dated 21.01.2015 passed by the learned Commissioner Inland Revenue (Appeals-III), Rawalpindi under section 221 of the Income Tax Ordinance, 2001 (“the Ordinance”) for the Tax Year 2012 on the grounds as set forth in the memo of appeal.

2.         Brief facts giving rise to the appeal are that the appellant taxpayer, an individual, derives income from preparation and sale of food items. Return of income tax for the Tax Year 2012 was filed by declaring taxable income at Rs.300,000/-. The case of the appellant was selected for audit under section 214C of the Ordinance by the FBR on the basis of certain parameters. In consequence thereof, proceedings were initiated and show cause notice under section 122(9) of the Ordinance was issued for providing records and information enumerated therein. As per the amended order, the appellant did not respond to the notices. Therefore, the Assessing Officer proceeded to assess income of the appellant under section 121(1)(d) of the Ordinance by disallowing purchases at Rs.215,050/- besides partly disallowing travelling and other expenses claimed in the P&L account. The appellant preferred an appeal before the learned CIR(A) who decided the same vide Order No.57/2014 dated 16.09.2014 by directing the Assessing Officer to work out the daily sales at the rate of Rs.6,000/- per day. Being aggrieved, the department assailed the said order before this tribunal by filing appeal on 21.11.2014 under section 131 of the Ordinance. Subsequently, the department after filing second appeal which was pending before this tribunal, also availed simultaneously another remedy by filing rectification application on 21.01.2015 under section 221 of the Ordinance before the learned CIR(A). Pending the departmental appeal before this tribunal, the learned CIR(A) accepted the rectification application of the department vide order dated 21.01.2015. Felt aggrieved, the appellant has assailed the said order before this forum on a number of grounds. However, it is pertinent to mention here that the departmental appeal bearing ITA No.1027/IB/2014 was earlier rejected by this tribunal vide order dated 29.08.2017 and the order bearing No.57/2014 dated 16.09.2014 passed by the CIR(A) was confirmed.

3.    This case came up for hearing on 10.02.2020. Learned AR of the taxpayer reiterated the contentions already submitted in the grounds of appeal as set forth in the memo of appeal. On the other hand, learned DR opposed the appeal on the ground that learned Commissioner (Appeals) has passed a speaking order and there is no illegality or lacuna in his order. He, therefore, prays for rejection of appeal. 

4.    Arguments heard and relevant record available on file carefully perused. The submissions made on behalf of the appellant have substance. The specific point requiring determination by this tribunal would be as to whether two parallel remedies could be availed by the department simultaneously on the same cause? Undisputedly, the department firstly assailed the appellate order passed by the Commissioner Inland Revenue (Appeals) bearing Order No.57/2014 dated 16.09.2014 by filing an appeal on 21.11.2014 before the tribunal under section 131 of the Ordinance on sole ground which read as under:-

“That CIR(A) was not justified in deciding the reduction of daily sales from Rs.7,000/- to 6,000/- as neither sales have been estimated nor issue of sales was raised in the grounds of appeal  but on the contrary assessment was finalized u/s 121(1)(d) of the I.T.O, 2001 through disallowing purchases @ 20% and add backs out of P & L expenses @ 30%.” 

Admittedly, during pendency of the appeal before this tribunal, the rectification application under section 221 ibid was also preferred by the department on 21.01.2015 before the CIR(A) against the very same judgment seeking the same relief as is sought in the appeal. The contents of the said application are reproduced hereunder:-

“Perusal of appellate order divulges that during the course of hearing before the CIR (Appeals) the AR of the taxpayer stated that the appellant’s sales have been exclusively estimated and daily sales have been reduced for Rs.7,000/- to 6,000/-.

Whereas the facts of the case are that no sales have been estimated for tax year 2012. Assessment has been finalized at net income of Rs.564,050/- by disallowing purchases @ 20% u/s 174(2) and add backs of Rs.31,000/- out of P&L expenses.”

The above said rectification application was decided by the learned CIR(A) vide order dated 21.01.2015 prior to deciding the departmental appeal by this tribunal. Thus it was incumbent upon the department to disclose to the learned CIR(A) that it had already filed the appeal before the tribunal against his order while filing the rectification application but neither it was pointed out to the learned CIR(A) nor this tribunal while deciding departmental appeal that their rectification application had earlier been decided by the CIR(A) in its favour and the relief sought in the said appeal had been granted. However, this tribunal vide order dated 29.08.2017 dismissed the department appeal on its own merit. This approach/attitude of the department is not appreciable and therefore, this tribunal is not sitting to protect the department in such like circumstance. I am afraid of this practice of seeking remedy in appeal by the revenue and simultaneously filing application for rectification of an order is a mockery of law notwithstanding the fact that Section 221 is restricted to rectifying a mistake which must be apparent from the record and its scope cannot be construed as that of a statutory right of appeal provided under sections 127 and 131 of the Ordinance of 2001. It is an established principle of law that when an appeal is pending before a superior forum, an application for rectification cannot be entertained by a subordinate forum as a rule. The Commissioner Inland Revenue (Appeals) is a forum, subordinate to the Appellate Tribunal Inland Revenue under the Income Tax Ordinance, 2001. Reliance may be placed on Civil Writ Petition No.25152 of 2013 titled as Industrial Equipment Company Chandigarh Vs Income Tax Appellate Tribunal and another decided on 18.11.2013 (Haryana High Court). 

Although the Department at least had two concurrent remedies, i.e. appeal and rectification application under section 131 and 221 of the Ordinance respectively to assail the order of the learned CIR(A) and one does not exclude the other, but it was open to it to choose either of the two and the moment remedy of appeal was availed, the doors of the CIR(A) to receive/entertain the rectification application under section 221 were closed to decide both the remedies simultaneously or one after the other. If duplication is allowed, then there would be no end of litigation, which may also cause conflicting judgments and would be sheer abuse of process of law. The Apex Court while dealing with a similar proposition in a case titled as Mrs. Amina Bibi vs. Nasrullah,(2000 SCMR 296) had discussed the remedies and panorama available to the litigant for his redressal against ex parte decree and para 7 thereof being relevant is given below:- 

“Where a suit has been decreed ex parte, various remedies are available to an aggrieved person for redress of his grievance. Firstly, an application under Order IX rule 13 CPC; secondly, an appeal from the ex parte decree under section 96 (2), CPC; a petition for review under section 114 read with Order XLVII and a civil suit on the ground of fraud and want of jurisdiction. The latter remedy is now substituted by section 12 (2) CPC. Here, the petitioner has exhausted her remedies by filing an application under Order IX rule 13 CPC and, therefore, on the same ground she cannot be permitted to re-agitate the same issue by means of a fresh petition under section 12 (2) CPC.” 

The Apex Court recently rendered a comprehensive judgment and his lordship Mr. Justice Mushir Alam, speaking for it in the case reported as Trading Corporation of Pakistan Vs. Devan Sugar Mills Limited and others (PLD 2018 SC 828) discussed the doctrine of election in depth and finally held that once the litigant opted to avail one out of the provided remedies, then it generally could not be permitted to initiate the other one. The relevant part of his lordship’s conclusion being applicable to the facts of the case in hand is reproduced hereunder:- 

“ …The moment suitor intends to commence any legal action to enforce any right and or invoke a remedy to set right a wrong or to vindicate an injury, he has to elect and or choose from amongst host of actions or remedies available under the law. The choice to initiate and pursue one out of host of available concurrent or co-existent proceedings/actions or remedy from a forum of competent jurisdiction vest with the suitor. Once choice is exercised and election is made then a suitor is prohibited from launching another proceeding to seek a relief or remedy contrary to what could be claimed and or achieved by adopting other proceeding/action and or remedy, which in legal parlance is recognized as doctrine of election, which doctrine is culled by the courts of law from the well-recognized principles of waiver and or abandonment of a known right, claim privilege or relief as contained in Order II, rule (2) C.P.C., principles of estoppel as embodied in Article 114 of the Qanun-e-Shahadat Order 1984 and principles of resjudicata as articulated in section 11, C.P.C. and its explanations. Doctrine of election apply both to the original proceedings/action as well as defences and so also to challenge the outcome on culmination of such original proceedings/action, in the form of order or judgment/decree C.R.No.1339/2017 10 (for illustration it may be noted that multiple remedies are available against possible outcome in the form of an order/judgment/decree etc. emanating from proceedings of civil nature, which could be challenged/defended under Order IX, rule 13 (if proceedings are ex-parte), section 47 objection to execution), section 114(by way of review of an order), section 115 (revision), under Order XXI, rules 99 to 103 C.P.C. and section 96 C.P.C. (appeal against the order/judgment) etc. Though there is no bar to concurrently invoke more than one remedy at the same time against an ex-parte order/judgment. However, once election or choice from amongst two or more available remedy is made an exhausted, judgment debtor cannot ordinarily be permitted subsequently to venture into other concurrently or coexisting available remedies. With more certainty it was further concluded that:- Giving choice to elect remedy from amongst several coexistent and or concurrent remedies does not frustrate or deny right of a person to choose any remedy, which best suits under the given circumstances but to prevent recourse to multiple or successive redressal of a singular wrong or impugned action before the competent forum/court of original and or appellate jurisdiction, such rule of prudence has been evolved by courts of law to curb multiplicity of proceedings. As long as a party does not avail of the remedy before a Court of competent jurisdiction all such remedies remain open to be invoked. Once the election is made then the party generally, cannot be allowed to hop cover and shop for one after another coexistent remedies. In an illustrative case this court in the case of Mst. Fehmida Begum v. Muhammad Khalid and others (1992 SCMR 1908) encapsulated the doctrine of election as follows:- 

“However, it is one thing to concede a power to the statutory forum to recall an order obtained from it by fraud, but another to hold that such power of adjudication or jurisdiction or jurisdiction is exclusive so as to hold that a suit filed in a civil Court of general jurisdiction is barred. I am therefore in agreement with my brother that a stranger to the proceedings, in a case of this nature has two remedies open to him. He can either go to the special forum with an application to recall or review the order, or file a separate suit. Once he acts to invoke either of the remedies, he will, on the general principles to avoid a conflict of decisions, ultimately before the higher appellate forums, be deemed to have given up and forfeited his right to the other remedy, unless as held in Mir Salah-ud-Din v. Qazi Zaheer-ud-Din PLD 1988 SC 221, the order passed by the hierarchy of forums under the Sindh Rented Premises Ordinance, leaves scope for approaching the Civil Court.” 

The ratio of the above stated case has also recently been applied by the Division Bench of the Hon’ble Lahore High in the case titled as Daan Khan (deceased) through legal heirs Vs Assistant Collector (Notified), (2019 CLC 483). In this case while deciding the Intra Court Appeal, it was observed that:

“Now a question arises as to whether after availing the remedy for restoration of earlier constitutional petition, the appellants could resort to the other remedy provided in Rule 4 of Order IX CPC. Answer to this question is available in a recent judgment handed down by the Hon’ble Supreme Court of Pakistan in the case of “Trading Corporation of Pakistan versus Devan Sugar Mills Limited and others” (PLD 2018 Supreme Court 828) wherein it has been held that “……………………..” On the basis of said precedent the conclusion is that the appellant’s second constitutional petition i.e. W.P.No.104-R of 2010, giving rise to instant appeal, was not competent.” 

The aforesaid principle has also been applied over the years in the Indian jurisdiction as well. Some of the leading cases in this regard are discussed hereunder:-

Jai Singh Vs Union of India and others (AIR 1977 SC 898), the apex Court held that the appellant cannot pursue two parallel remedies in respect of the same matter at the same time. Chemech Engineers Pvt. Ltd. vs The Director Of Industries And others (AIR 1994 Mad 14)

"It has also been brought in our notice that after the dismissal of the writ petition by the High Court, the appellant has filed a suit, in which he has agitated the same question which is the subject matter of the writ petition. In our opinion, the appellant cannot pursue two parallel remedies in respect of the same matter at the same time."

Keeping in view the judicial consensus on the issue at hand, it would be safe to conclude that the respondent department at the most could select one of the remedies provided by the Statute, but it was not its choice to avail/press one after the other or simultaneously. Further as stated above, the departmental appeal was dismissed by this tribunal vide order dated 29.08.2017 whereby the earlier order bearing No.57/2014 dated 16.09.2014 passed by the CIR(A) was confirmed and the department had not filed reference application under section 133 of the Ordinance against the said order. Therefore, the order passed by this tribunal had attained finality in terms of subsection (10) of section 132 of the Ordinance. I, therefore, hold that as an appeal, on the same question, raised in the rectification application, was pending consideration before the tribunal, the application for rectification was not maintainable and therefore, impugned order passed by the leaned CIR(A) under section 221 of the Ordinance is annulled as the respondent department cannot be permitted to avail two parallel remedies for the same relief. 

5.         For the reason stated above, the appeal of the appellant is accepted and the order passed by the CIR(A) is annulled. This order consists of (07) pages and each page bears my signature. 

 

(M.M. AKRAM)

JUDICIAL MEMBER

(Empowered u/s 130 (8AA) of the Income Tax Ordinance, 2001 to exercise powers and functions of the Appellate Tribunal sitting singly).