Sheikh Tariq Mahmood Vs The Commissioner IR, RTO, Rawalpindi.

 APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I, ISLAMABAD

 

ITA No.686/IB/2024

 (Tax Year, 2021)

 

 

Sheikh Tariq Mahmood; V-571, Gandum Mandi, Rawalpindi.		Appellant
	Vs
The Commissioner Inland Revenue,  RTO, Rawalpindi.		Respondent
Appellant by		Sheikh Istamalat Ali, Advocate
Respondent by		Mr. M. Hayat, DR
Date of hearing		20.05.2024
Date of order		20.05.2024

 

O R D E R

M. M. AKRAM (JUDICIAL MEMBER): The appellant taxpayer has filed a tilted appeal on 07.05.2024 against the impugned Appeal Order No.1699/2024 dated March 12, 2024, issued by the learned Commissioner of Inland Revenue (Appeals), Sargodha, concerning the tax year 2021.

2.      The Tax Laws (Amendment) Act, 2024 has introduced changes to the Income Tax Ordinance, 2001 regarding the filing of appeals, and reference applications before the Commissioner (Appeals), the Appellate Tribunal Inland Revenue (ATIR), and the High Court respectively. These amendments specify the monetary limits for filing appeals and reference applications with these appellate authorities and Courts. In conjunction with these changes, new sections such as section 43A of the Sales Tax Act, 1990, section 33A of the Federal Excise Act, 2005, and section 126A of the Income Tax Ordinance have been added. These provisions delineate the financial jurisdiction for appeals in accordance with the specified limits. These provisions outline the pecuniary jurisdiction for appeals as follows:- 

         Sales Tax Act, 1990

Section 43A. Pecuniary jurisdiction in appeals.- (1) Subject to other provisions of this Act,-

(a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed ten million rupees; or

(b) an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds ten million rupees.

(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001).

(3) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (h) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001 (XLIX of 2001).

Federal Excise Act, 2005

"Section 33A. Pecuniary jurisdiction in appeals.- (1) Subject to other provisions of this Act,-

(a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed five million rupees; or

(b) an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds five million rupees.

(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001).

(3) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in ' cases under clause (b) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001).

Income Tax Ordinance, 2001

"126A. Pecuniary jurisdiction in appeals.-(1) Subject to other provisions of this Act,-

(a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed twenty million rupees; or

(b) an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds twenty million rupees.

(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133.

(3) A person or, as the case may be, Officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (b) of sub-section (1) may file a reference before the High Court in accordance with section 133.

3.     A deeper analysis of the amendment introduced by the Tax Laws (Amendment) Act, 2024 reveals that the legislature intended to simplify the appeal process from a dual forum to a single forum, while maintaining both appellate forums, i.e., the CIR(A) and the ATIR. Under the previous system, an aggrieved person could file an appeal before the CIR(A) and subsequently at the ATIR without considering any monetary limits for filing of appeal. However, under the new system, the taxpayer can file the appeal at either of these forums based on the value of the assessed tax or refund. If the value of the assessed tax or refund is PKR 20 million or below, the forum is the CIR(A); for amounts exceeding PKR 20 million, the forum is the ATIR. Both appellate forums are considered final fact-finding authorities within their respective domains. Nonetheless, a person aggrieved by the decision of these forums may challenge the decision on a point of law by filing a reference under section 133 of the Ordinance before the respective High Court.

4.      This new regime is set to take effect on May 3, 2024. To manage the transition to the new appeal regime at the CIR(A) level, the legislature designated June 16, 2024, as the date from which cases exceeding the threshold of PKR 20 million will be transferred to the ATIR, while cases valued at or below PKR 20 million will remain with the CIR(A). This transition was necessary because cases might have been listed or nearing conclusion at the CIR(A) during the interim period (May 3, 2024, to June 16, 2024). Therefore, a transition period was required to smoothly switch from the old regime to the new regime, transferring cases from the CIR(A) to the ATIR.

5.      It is important to note that there is no prohibition on the CIR(A) deciding cases valued over PKR 20 million during this gap period (May 3, 2024, to June 16, 2024). Hence, to preserve the taxpayers' rights, section 131 of the Ordinance includes the phrases "Subject to section 126A" and "Commissioner (Appeals)". For ease of reference relevant part of section section 131 of the Ordinance is reproduced below:

"Section 131. Appeal to the Appellate Tribunal. (1) Subject to section 126A, any person, other than an SOE, aggrieved by any order passed by an officer of Inland Revenue or Commissioner or Chief Commissioner or the Board or Commissioner (Appeals) under this Ordinance or the rules made thereunder may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:" (Emphasis supplied) 

Additionally, the phrase "or, as the case may be, a reference to the High Court" supports the spirit of clause (a) of subsection (1) of Section 126A and subsection (2) of Section 126A to remove any doubts regarding cases decided during the gap period of May 3, 2024, to June 15, 2024, where the value of the tax assessment or refund is below PKR 20 million. Any other interpretation would render the legislative text redundant or undermine the concept of a single appeal regime. Thus, applying the principle of harmonious construction of the statute and avoiding redundancy, we conclude:

(i)                 The CIR(A) has jurisdiction to decide all cases without limitation of any threshold value of tax assessment or refund from May 3, 2024, to June 15, 2024.

(ii)                For cases where the assessed tax or refund at the assessment level (in the original order) exceeds PKR 20 million, an appeal would lie to the ATIR w.e.f 03.05.2024.

(iii)               For cases where the assessed tax or refund at the assessment level (in the original order) is PKR 20 million or below, the aggrieved party may file an appeal before CIR(A) w.e.f 03.05.2024.

6.      Given this backdrop, in the instant, the issue pertains to the assessment of tax under the Income Tax Ordinance, 2001, with a tax amount assessed at Rs.2,036,272/-. Therefore, as per subsection (2) of section 126A of the Income Tax Ordinance, 2001 the reference application under section 133 of the Ordinance is to be made before the High Court. It is essential to note that the applicable law is determined by the legislation in force at the time of filing the appeal or reference application. Reliance is placed on the judgments titled Bashir Vs Wazir Ali, (1987 SCMR 978). In the said judgment it was observed that:-

“7. Before us the learned counsel for the appellant raised the same objection as before the High Court. It was, however, pointed out to him that the relevant provision of the amending Act V of 1986 had merely changed the forum in which the appeal was to be heard and did not affect any vested right of appeal and that, as held by this Court in Adnan Afzal v. Capt. Sher Afzal P L D 1969 S C 187, such amendments are merely procedural in nature and are, therefore, operative retrospectively.

 

It was pointed out by the learned Assistant Advocate-General that the same contention had been raised before the Lahore High Court in the case of Daraz Ali and others v. Nathu Khan 1982 C L C 2399 when a first appeal was returned for disposal to the relevant District Judges after the pecuniary jurisdiction of the District Judges was raised from rupees twenty-five to rupees fifty thousand by an amendment in section 18 of the Punjab Civil Courts Ordinance (II) of 1962 by Ordinance (XX) of 1978. The plea was rejected by the High Court for the same reason stated above, relying inter alia on this Court's in Adnan Afzal's case (supra).

 

8. On coming to know of the above-noted case-law, the learned counsel for the appellant had nothing to add.

As such for the foregoing reasons this appeal is dismissed, having no merits, with costs throughout.” 

By respectfully following the above judgment, the objection raised by the office is upheld, and the office is directed to promptly return the appeal to the appellant.    

 

 

 

		-Sd-                    (M. M. AKRAM)                    JUDICIAL MEMBER
	-Sd- (IMRAN LATIF MINHAS)   ACCOUNTANT MEMBER