 
 
IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
 
 
 
 
 
 
PRESENT 
 
MR. JUSTICE IFTIKHAR MUHAMMAD CHAUDHRY, HCJ 
MR. JUSTICE RAJA FAYYAZ AHMED 
MR. JUSTICE CH. IJAZ AHMED 
 
 
Civil Appeal No.778 of 2005 
 
(On appeal from the judgment dated 30.3.2005 passed 
by the High Court of Sindh, Karachi in C.P. No. D-652/ 
2004) 
 
The Commissioner of Income Tax 
 
 
…. 
Appellant 
 
Versus 
 
M/s Eli Lilly Pakistan (Pvt.) Ltd.  
 
 
…. 
Respondent 
 
CAs No. 876-879 of 2005 
 
(On appeal from the judgment dated 2.3.05 passed by 
High Court of Sindh, Karachi in CPs 643-646/04) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Honda Shahra-e-Faisal (AOP) 
 
 Resp.in CA 876/05 
Sh. Muhammad Amjad Maqbool 
 
 
in CA 877/05 
Sh. Muhammad Mubashir 
 
 
 
in CA 878/05 
Sh. Muhammad Afzal Maqbool  
 
 
in CA 879/05 
 
 
CAs No. 1601-1625 of 2006 
 
(On appeal from the judgment dated 5.10.06, 24.1.06, 
26.1.06, 16.3.06, 24.3.06, 12.4.06, 29.3.6, 30.3.06, 
21.4.06, 7.4.06, 28.3.06, 9.5.06, 10.8.06, passed by High 
Court of Sindh, Karachi in CP No.379/05, CP No. D 
378/05, 1707/5, ITRA No.245-247/06, 169/06, ITR 
No.177-179/06, ITRA No.196-196 A/06, 197-198/06, 
256/06, 203/06, 26/06, 225/06, 224/06, 235/06, 239/06, 
230-231/06, 264/06, D-652/04, CP 643/04) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
 
 
 
 
 
Versus 
 
 
 
M/s Aero Asia International (Pvt.) Ltd. 
     Res. in CA 1601/06 
CA 778-2005 ETC 
 
2 
M/s Fauji Oil terminal & Distribution Co. Ltd. 
in CA 1602/06 
M/s Gul Ahmed Energy Ltd. 
 
 
 
in CA 1603/06 
M/s Nippon Safety Glass Pak (Pvt.) Ltd. 
 
in CA 1604-06/06 
M/s G.T.N. Fabrics (Pvt) Ltd. 
 
 
 
in CA 1607/06  
M/s N.C.R. Corporation   
 
 
 
in CAs 1608-10/06 
M/s Amin Textile Mills Ltd. 
 
 
 
in CAs 1611-14/06 
M/s Jehangir Siddiqui & Co Ltd. 
 
 
in CA 1615/06 
M/s Khayaban-e-Iqbal (pvt) Ltd. 
 
 
in CA 1616/06 
M/s Packages Ltd.  
 
 
 
 
in CA 1617/06 
M/s SAF Textile Mills Ltd. 
 
 
 
in CA 1618-19/06 
M/s Fahad Security Service Ltd. 
 
 
in CA 1620/06 
M/s Al-Rehman Security Services Ltd. 
 
in CA 1621/06 
M/s Al-Fatah Security Services Ltd.  
 
in CA 1622-24/06 
M/s Sui Southern Gas Ltd. 
 
 
 
in CA 1625/06 
 
CAs No. 2670-2687 of 2006 
 
(On appeal from the judgment dated 22.8.06, 31.5.06, 
15,9.06, 26.9.06, 22.9.06, 28.9.06 passed by High Court 
of Sindh, Karachi in ITR Nos. 404-406, 492/06, 272/06, 
436-439/06, 450-452/06, 512-513/06, 263/06, 298/06, 
307-308/06) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
 
 
 
 
 
Versus 
 
 
 
M/s B.P. Industries Ltd.  
 
 
Resp.in CA 2670-72/06 
M/s Pakistan Refinery Ltd.  
 
 
 
in CA 2673/06 
M/s Haji Muhammad Suleman  
 
 
in CA 2674/06 
M/s Oxyplast (Pvt) Ltd.  
 
 
 
in CAs2675-78/06 
M/s Maroof Security Services (Pvt) Ltd. 
 
in CAs 2679-81/06 
M/s Zever Chemical Ltd.  
 
 
 
in CAs 2682-83/06 
M/s Sui Southern Gas Ltd. 
 
 
 
in CA 2684/06 
M/s Hashoo Holding (Pvt) Ltd.  
 
 
in CA 2685/06 
M/s Rupali Bank Ltd. 
 
 
 
 
in CA 2686-87/06 
 
CAs No. 585-595 of 2007 
 
(On appeal from the judgment dated 19.10.06, 28.11.06, 
14.11.06, 
14.11.06, 
13.10.06, 
26.9.06, 
10.10.06, 
17.10.06, 17.11.06, passed by High Court of Sindh at 
Karachi in ITRA No.490/06, 49/06, 555/06, 559/06, 
539/06, 510-511/06, 536-537/06, 541/06, 558/06) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
 
 
 
 
 
Versus 
 
 
 
M/s Evian Fats and Oil (Pvt) Ltd. 
 
Res.   in CAs 585-586/07 
M/s Dawlance (Pvt) Ltd.  
 
 
 
in CA 587/07 
M/s Baba Farid Sugar Mills Ltd. 
 
 
in CA 588/07 
M/s Model Homes  
 
 
 
 
in CA 589/07 
M/s Zever Chemical Ltd.  
 
 
 
in CAs 590-91/07 
M/s Mehran Sugar Mills Ltd. 
 
 
 
in CAs 592-93/07 
M/s Irfan Iqbal Puri  
 
 
 
 
in CA 594/07 
M/s Zed Pak Cement Factory Ltd. 
 
 
in CA 595/07 
CA 778-2005 ETC 
 
3 
 
CAs No. 706-707 of 2007 
 
(On appeal from the judgment dated 21.11.06 and 
24.01.07, passed by High Court of Sindh, Karachi in 
ITRA No.472-473/06) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
 
 
 
 
 
Versus 
 
 
 
Daud Ahmed  
 
 
 
 
    Res. in both cases 
 
CAs No. 1369-1404 of 2007 
 
(On appeal from the judgment dated 24.1.07, 11.1.07, 
20.2.07, 21.5.07, 24.1.07, 6.2.07, 12.9.07, 18.5.07, 
26.4.07, 22.10.07, passed by High Court of Sindh, 
Karachi in ITRA No.603/06, 590/06, 23-24/07, 613-
614/06, 5-7/07, 604/06, 211/06, 73/07, 92-115/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Waken Hut (Pvt) Ltd. 
 
 
   Res. in CA 1369/07 
M/s S.R.S Industrial Corp. (Pvt.) Ltd.  
 
in CA 1370/07 
M/s Kashmir Corporation (Pvt) Ltd. 
 
 
in CAs 1371-72/07 
M/s Ahmed Ibrahim Agency (Pvt) Ltd. 
 
in CAs 1373-74/07 
M/s Condor Security Services (Pvt) Ltd. 
 
in CAs 1375-77/07 
M/s Nadeem Brothers   
 
 
 
in CA 1378/07 
M/s Al Fatah Security Services (Pvt.) Ltd. 
 
in CA 1379/07 
M/s Haseeb Spinning Mills Ltd.  
 
 
in CA 1380/07 
M/s Muhammad Saeed Transporters  
 
in CA 1381-83/07 
M/s Dost Muhammad Transporters 
 
 
in CA 1384-86/07 
M/s Abdul Rashid Transporters  
 
 
in CA 1387-89/07 
M/s Arshad Hussain Transporters 
 
 
in CA 1390-92/07 
M/s Muhammad Imran Transporters   
 
in CA 1393-95/07 
M/s Ali Agencies Distributors Medicine 
 
in CA 1396/07 
M/s Muhammad Saleem Transporters 
 
in CA 1397-99/07 
M/s Muhammad Jawaid Transporters  
 
in CA 1400-01/07 
M/s Muhammad Ramzan Transporters 
 
in CA 1402-04/07 
 
CAs No. 459-501 of 2008 
 
(On appeal from the judgment dated 22.10.07, 30.11.06, 
26.10.07, 31.10.07, 17.12.07, passed by High Court of 
Sindh, Karachi in ITR No.233 - 265/07, 576-577/06, 
578/06, 197/07, 230 - 232/07, 380-382/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s S.C. Jhonson and sons (pvt) Ltd.  
 Resp. in CA 459/08 
M/s Pak. Security Services Ltd.  
 
 
in CA 460-465/08 
M/s Global Security Pakistan Ltd. 
 
 
in CA 466/2008 
M/s Shahzad Security Services (pvt) Ltd. 
 
in CA 467-70/08 
M/s Bawany Air Products Ltd.   
 
 
in CA 471-474/08 
CA 778-2005 ETC 
 
4 
M/s Naurus (Pvt) Ltd. 
 
 
 
 
in CA 475-477/08 
M/s Security & Management Services Ltd.  
in CA 478-80/08 
M/s Rhone Poulene (Pvt) Ltd.  
 
 
in CA 481-83/08 
M/s Industrial Chemicals (Pvt) Ltd. 
 
 
in CA 484/08 
M/s Gama Silk Mills Ltd.  
 
 
 
in CA 485/08 
M/s Pakistan Emerging Ventures Ltd.  
 
in CA 486/08 
M/s Aluminum Company of Pakistan Ltd. 
 
in CA 487/08 
M/s Continental Furnishing Co. Ltd.  
 
in CA 488/08 
M/s Mass Advertising (Pvt) Ltd.  
 
 
in CA 489/08 
M/s Superior Security Guards Ltd. 
 
 
in CA 490-91/08 
M/s Sibaro Agencies (pvt) Ltd.   
 
 
in CA 292-494/08 
M/s Pak. Hi Oils (Pvt) Ltd. 
 
 
 
in CA 495/08 
M/s General Trading Establishment   
 
in CA 496/08 
M/s Tin Box  
 
 
 
 
 
in CAs 497-498/08 
M/s Blitz Security Services (Pvt) Ltd.  
in CAs 499-501/08 
 
CAs No. 783-791 of 2008 
 
(On appeal from the judgment dated 3.4.08, 2.4.08, 
passed by Islamabad High Court, Islamabad in RA No. 
50-52, 56-58/07, 62/07, 63/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
 
M/s National Highway Authority 
 
Resp. in CAs 783-788/08 
M/s Security Investment Bank Ltd. 
 
 
in CAs 789-791/08 
 
CAs No. 803-1039 of 2008 
 
(On appeal from the judgment dated 3.4.08, 2.4.08, 
7.4.08, 14..4.08, 10.4.08, passed by Lahore High Court, 
Multan Bench in PTR Nos. 10/07, 10/06, 27/06, 35/06, 
04/07, 64/07, 11-12/07, 23-25/07, 30-33/07, 47-52/07, 
61/07, 63/07, 16/08, 19/08, 42/08, 09/07, 17/07, 18/07, 
54-56/07, 76/07, 59/07, 26-27/08, 30/08, 386/06, 372/07, 
405-406/07, 531/07, 533/07, 550-51/07, 612-14/07, 661-
63/07, 674/07, 698/07, 849/07, 880-81/07, 532/07, 
534/07, 540/07, 1-3/08, 513/07, 629/07, 635/07, 707-
10/07, 816/07, 821/07, 469-471/07, 630-33/07, 773/07, 
777-780/07, 805-808/07, 830-831/07, 886-888/07, 334-
339/07, 511-12/07, 625-26/07, 636-39/07, 715/07, 
123/07, 202/07, 206/07, 221-22/07, 241-42/06, 251-
52/07, 355/06, 360/06, 374-375/07, 413/06,  464/07, 
505-507/07, 580-584/07, 593-596/07, 679/07, 841/07, 
882-885/07, 208/06, 356/06, 592/07, 172-173/07, 289-
290/07, 
347-348/07, 
359/07, 
415/07, 
418-421/07, 
459/07, 461/06, 465/07, 446/07, 467-468/07, 495-
499/07, 
519-520/07, 
640/07, 
642-644/07, 
684/07, 
793/07, 823-824/07, 837-838/08, 842-844/07, 852-
864/07, 37/07, 78/08, 114/07, 151-154/07, 166-171/07, 
174/07, 248-250/07, 262-263/05, 118/06, 23-24/07, 34-
CA 778-2005 ETC 
 
5 
36/07, 102/07, 177-179/07, 183-184/07, 189/07, 244/07, 
294/07, 358/07, 391-92/07, 462-63/07, 734/07, 4/08) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Khalid Javed  
 
 
 
 
Resp. in CA 803/08 
Intizar Ali Prop. M/s Bismillah  
 
 
in CA 804/08 
Munazza Iqbal 
 
 
 
 
 
in CAs 805-06/08 
M/s Circle ‘M’ Co. (Pvt) Ltd. 
 
 
 
in CA 807/08 
Rana Shahid Hussain,   
 
 
 
in CA 808/08 
Khalid Javed, Prop. Laureates Public School  
in CAs 809-10/08 
M/s Jalandhar Autos Workshop Multan 
 
in CAs811-813/08 
Allah Diya Sh.  
 
 
 
 
 
in CA 814/08 
Muhammad Khalid  
 
 
 
 
in CA 815/08 
M/s Chaudhry Electronics Distt. Pakpattan  
in CA 816/08 
M/s Pakistan Poultry Enterprises  
 
 
in CA 817/08 
Muhammad Amin  
 
 
 
 
in CA 818/08 
Mistry Ilam Din Repair Works  
 
 
in CA 819/08 
M/s Karam Pansar Store, Pakpattan  
 
in CA 820, 22, 23/08 
M/s Javed Iron Store 
 
 
 
 
in CA 821/08 
Ch. Abdul Rehman 
 
 
 
 
in CA 824/08 
Zia ur Rehman 
 
 
 
 
 
in CA 825/08 
Three Star Paper Cone, Industries 
 
 
in CA 826/08 
M/s Sh. Muhammad Abbas 
 
 
 
in CA 827/08 
Mudassar Hussain  
 
 
 
 
in CA 828/08 
Zia ul Hassan Siddiqui 
 
 
 
 
in CA 829/08 
M/s Shafique Building Material Store  
 
in CA 830/08 
M/s Safdar Naeem 
 
 
 
 
in CA 831/08 
M/s Lucky Steel   
 
 
 
 
in CAs 832-34/08 
Nishat Merzia Khanum  
 
 
 
in CA 835/08 
Akhtar Ali Ansari  
 
 
 
 
in CA 836/08 
M/s Honda Breeze Multan  
 
 
 
in CA 837-839/08 
M/s Phalia Sugar Mills   
 
 
 
in CA 840/08 
M/s Ibrahim Fibers Ltd.   
 
 
 
in CA 841/08 
M/s Imperial Electrical Company ltd.  
 
in CAs 842-43/08 
M/s Hybrid Techniques (Pvt) Ltd, Lahore 
 
in CA 844/08 
M/s Crescent Steel & Allied Products Ltd 
 
in CA 846/08 
M/s Shams Textile Mills Ltd.  
 
 
 
in CA 847/08 
M/s Fine Gas Co. (Pvt) Ltd. 
 
 
 
in CAs 848-50/08 
M/s Hajra Textile Mills Ltd. 
 
 
 
in CAs 851-53/08 
M/s Resham Textile Mills Ltd.  
 
 
in CA 854/08 
M/s Sarfraz Yaqoob Textile Mills Ltd  
 
in CA 855/08 
M/s Sui Northern Gas Pipelines Ltd  
 
in CA 856-58/08 
M/s Hybrid Techniques (Pvt) Ltd, Lahore 
 
in CA 859/08 
M/s Rupail Ltd, Lahore  
 
 
 
in CA 860/08 
Prime Commercial Bank, Ltd 
 
 
 
in CA 861/08 
M/s Security Solutions (Pvt) Ltd. 
 
 
in CA 862-64/8 
M/s Airsys ATM Ltd. 
 
 
 
 
in CA 865/08 
M/s Idrees Cloth House  
 
 
 
in CA 866/08 
M/s Sh. Shahid Rashid  
 
 
 
in CA 867/08 
M/s Malik Manzoor Hussain & Co. 
 
 
in CA 868-71/08 
Mian Muhammad Zahoor 
 
 
 
in CA 872/08 
Tariq Garments, Lahore  
 
 
 
in CA 873/08 
CA 778-2005 ETC 
 
6 
M/s Ammar Medical Complex Ltd. 
 
 
in CA 874/08 
M/s Ammar Medical Complex Ltd 
 
 
in CAs 875-76/08 
Kh. Khawar Rashid  
 
 
 
 
in CAs 877-80/08 
Shahzad A. Mumtaz 
 
 
 
 
in CA 881/08 
Siddiqui Brothers (Pvt) Ltd. 
 
 
 
in CAs 882-85/08 
M/s Reem Rice Mills (Pvt) Ltd  
 
 
in CAs 886-89/08 
M/s Muhammad Saeed  
 
 
 
in CA 890/08 
M/s Punjab Oil Mills Ltd  
 
 
 
in CA 891/08 
M/s Ravi Spinning Mills Ltd 
 
 
 
in CAs 892-94/08 
M/s Thal Industries Ltd.  
 
 
 
in CAs 895-900/08 
M/s Airsys ATM Ltd 
 
 
 
 
in CAs 901-02/08 
M/s Kh. Mahboob Elahi  
 
 
 
in CAs 903-06/08 
M/s Kh. Shahid Rashid  
 
 
 
in CAs 907-10/08 
M/s Four Star (Pvt) Ltd  
 
 
 
in CA 911/08 
M/s Moto Travel (Pvt) Ltd 
 
 
 
in CA 912/08 
M/s Indus Fruit Products Ltd   
 
 
in CA 913/08 
M/s Taiwan Chinese Restaurant (Pvt) Ltd 
 
in CA 914/08 
M/s Asim Siddique Associates  
 
 
in CA 915/08 
M/s Micko Industrial Chemicals (Pvt) Ltd 
 
in CA 916/08 
M/s Lipa Security Services (Pvt) Ltd  
 
in CA 917-18/08 
M/s Hafeez Shafi Tanneries (Pvt) Ltd  
 
in CAs 919-20/08 
M/s Asif Paint Industries   
 
 
 
in CA 921/08 
M/s Riasat Ali 
 
 
 
 
 
in CA 922/08 
M/s Honda Fort (Pvt) Ltd  
 
 
 
in CAs 923-24/08 
M/s Mohammad Sarwar  
 
 
 
in CA 925/08 
M/s Newage Plastic (Pvt) Ltd  
 
 
in CA 926/08 
M/s Ahad Fibers (Pvt) Ltd 
 
 
 
in CAs 927-29/08 
M/s Tayyab Textile Mills (Pvt) Ltd 
 
 
in CA 930/08 
M/s Sahil Ltd.  
 
 
 
 
 
in CA 931/08 
M/s Hermes on Line (Pvt) Ltd  
 
 
in CAs 932-34/08 
M/s Anjum Atta Sheikh  
 
 
 
in CAs 935-38/08 
M/s Akaasul Musaffa (Pvt) Ltd  
 
 
in CA 939/08 
M/s Muhammad Hafeez Khan  
 
 
in CA 940/08 
M/s Best Foods USA (Non resident)  
 
in CAs 941-44/08 
M/s Premier Rice Mills Gujrat  
 
 
in CA 945/08 
Ch. Riasat Ali 
 
 
 
 
 
in CA 946/08 
Mian Pervaiz Akhtar 
 
 
 
 
in CA 947/08 
M/s Amin Sajjad Heera  
 
 
 
in CAs 948-49/08 
M/s Pak. Pipe Steel Industries  
 
 
in CA 950/08 
M/s International Currency Exchange  
 
in CA 951/08 
M/s Allah Walay Jewelers 
 
 
 
in CA 952/08 
Muhammad Yousaf 
 
 
 
 
in CA 953/08 
Faisal Metal Works 
 
 
 
 
in CA 954/08 
M/s PCA Cargo (Pvt) Ltd. 
 
 
 
in CA 955/08 
Imran Shafi Curtain Point 
 
 
 
in CA 956/08 
M/s Muhammad Farooq Prop. Jinnah Autos  
in CAs 957-59/08 
M/s Feed Industries (Pvt) Ltd  
 
 
in CA 960/08 
M/s Ch. Engineering Co.  
 
 
 
in CA 961/08 
M/s Honda Homes  
 
 
 
 
in CA 962/08 
M/s Muhammad Asif Prop. Honda Palace  
in CAs 963-65/08 
M/s Aslam Flour Mills (Pvt) Ltd  
 
 
in CAs 966-968/08 
M/s Sonex Metal Industries (Pvt) Ltd  
 
in CAs 969-70/08 
M/s Gojra Tannery  
 
 
 
 
in CAs 971-972/08 
CA 778-2005 ETC 
 
7 
M/s K.K. Chicks 
 
 
 
 
 
in CA 973/08 
M/s Sonica Plastic Industries   
 
 
in CA 974/08 
M/s Butt Traders Commission Agent  
 
in CAs 975-76/08 
M/s Mahboob Elahi & Sons 
 
 
 
in CA 977/08 
M/s Khyzer Hayat  
 
 
 
 
in CA 978/08 
M/s Gujranwala Gas 
 
 
 
 
in CAs 979-80/08 
M/s Nasir Pervaiz Hardware Store 
 
 
in CA 981/08 
M/s Nasim Impex Cloth House  
 
 
in CA 982/08 
M/s Mahmood Ali  
 
 
 
 
in CA 983/08 
M/s Ch. Rice Mills  
 
 
 
 
in CA 984/08 
M/s Muhammad Latif Kunda Maker  
 
in CA 985/08 
M/s Zaka Ullah, Saif Ullah PEPSI Agency  
in CA 986/08 
M/s Mahboob Elahi & Sons (Pvt) Ltd  
 
in CAs 987-88/08 
M/s Shahid Hardware Store 
 
 
 
in CAs 989-91/08 
Ejaz-ul-Haq  
 
 
 
 
 
in CAs 992-94/08 
Javed Iqbal  
 
 
 
 
 
in CA 995/08 
Gondal Traders 
 
 
 
 
 
in CA 996/08 
Madina Traders 
 
 
 
 
 
in CA 997/08 
M/s Abdul Rauf & Brothers 
 
 
 
in CA 998/08 
M/s ICARO (Pvt) Ltd. 
 
 
 
 
in CA 999/08 
M/s Kohinoor Smith (Pvt) Ltd  
 
 
in CA 1000/08 
 
M/s Ravi Security Guard (Pvt) ltd 
 
 
in CA 1001/08 
M/s Kh. Electronics (Pvt) Ltd 
 
 
 
in CAs 1002-3/08 
Mrs. Saleh Ahmed  
 
 
 
 
in CAs 1004-5/08 
Mst. Mumtaz Begum 
 
 
 
 
in CA 1006-7/08 
M/s Siza International (Pvt) Ltd  
 
 
in CAs 1008-11/08 
M/s International Manpower Lahore Cantt.  
in CA 1012/08 
M/s Taq International Cargo Services (Pvt)   
in CAs 1013-15/08 
M/s Bright Career School  
 
 
 
in CAs 1016-17/08 
M/s Nafees Legler Denim Mills Ltd 
 
 
in CA 1018/08 
M/s Dawchem (Pvt) Ltd  
 
 
 
in CA 1019-20/08 
M/s ICARO (Pvt) Ltd. 
 
 
 
 
in CA 1021-23/08 
M/s Essena Foundation (Pvt) Ltd 
 
 
in CA 1024/08 
M/s Ghulam Rasool Co. (Pvt) Ltd 
 
 
in CAs 1025-27/08 
Mrs. Sobia Haroon 
 
 
 
 
in CA 1028/08 
M/s Shera Films Corp. Lahore  
 
 
in CA 1029/08 
M/s Buro Interiart (Pvt)   
 
 
 
in CA 1030/08 
M/s Ghousia Embroidery Lahore 
 
 
in CA 1031/08 
M/s Sargodha Textile Mills Ltd  
 
 
in CA 1032/08 
M/s Misto Industries (Pvt) Ltd  
 
 
in CA 1033/08 
M/s H. H. Associates, Lahore  
 
 
in CAs 1034-35/08 
M/s A. R. Tannery, Kasur 
 
 
 
in CA 1036/08 
M/s Salamat School System, Lahore  
 
in CA 1037/08 
M/s Popular Medical Service, Lahore  
 
in CA 1038/08 
M/s Security Solutions (Pvt) Ltd. 
 
 
in CA 1039/08 
 
 
CAs No.1148-1150 of 2008 
 
(On appeal from the judgment dated 12.3.2008 passed 
by Lahore High Court, Rawalpindi Bench in TR Nos. 
60/07, 100-101/06) 
 
CA 778-2005 ETC 
 
8 
The Commissioner of Income Tax  
 
 
…Appellant 
 
 
 
 
 
 
 
 
 
Versus 
Qamar-uz-Zaman (in all cases)  
 
 
…Respondent  
 
 
CIVIL PETITION No.1245 OF 2008 
(On appeal from the judgment dated 13.3.08 passed by 
Lahore High Court, Rawalpindi Bench in TR No.110/06) 
 
The Commissioner of Income Tax  
 
 
…Petitioner 
Versus 
M/s Attock Refinery Ltd, Morgah, Rwp. 
 
…Respondent 
 
 
CAs No.1492-1509 of 2008 
(On appeal from the judgment dated 10.4.2008 passed 
by Lahore High Court, Lahore in PTR Nos. 460-61/06, 
453/06, 500/07, 617-18/07, 817-818/07, 832-833/07, 
868-70/07, 889-93/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
 
M/s Jhelum Valley Coal (Pvt) Ltd 
 
Resp..in CAs 1492-93/08 
Mian Maqsood Ahmed C/o Mumtaz Foundry 
in CA 1494/08 
Mst. Ghazala Roohi C/o Ittefaq Co. 
 
 
in CA 1495/08 
M/s M.E.C. Engineering Works (Pvt) Ltd 
 
in CAs1496-97/08 
Sami Ullah Sheikh  
 
 
 
 
in CAs1498-99 
M/s Millat Enterprises (Pvt) Ltd  
 
 
in CA 1500/08 
Muhammad Aslam Rahi  
 
 
 
in CA 1501/08 
M/s Aized Beverage Industries (Pvt) Ltd 
 
in CA 1502/08 
M/s Mohsan Rashid (Pvt) Ltd.  
 
 
in CAs 1503-4/08 
M/s Faisalabad Education Foundation 
 
in CAs 1505-13/08  
 
 
 
CAs No. 1847-1849 of 2008 
 
(On appeal from the judgment dated 17.9.2008 passed 
by Lahore High Court, Lahore in ITRA Nos. 230-32/07) 
 
Commissioner (Legal Division)  
 
…Appellant 
Versus 
Cherat Electric Ltd. Karachi 
 
 
 
…Res. in all cases 
 
CAs No. 2257-2281, 2283-2311 of 2008 
 
(On appeal from the judgment dated 23.9.2008 passed 
by Lahore High Court, Lahore in PTR Nos. 35-36/08, 
106-108/08, 207/08, 316-18/08, 338-39/08, 438/08, 
47/08, 63-67/08, 98-99/08, 133-36/08, 163/08, 165-
CA 778-2005 ETC 
 
9 
74/08, 253/08, 274/08, 348/08, 409/08, 432-33/08, 
25/08, 175-76/08, 250/08, 252/08, 320/08, 323/08, 
325/08, 327/08, 330-31/08, 333/08, 335/08) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Zameer Parvez Shah 
 
 
 
Resp. in CA 2257-58/08 
Ali Raza Ayub 
 
 
 
 
 
in CA 2259/08 
Muhammad Saleem Akhtar 
 
 
 
in CA 2260/08 
M/s Faisal Hospital 
 
 
 
 
in CA 2261/08 
M/s Masood Textile Pvt. Ltd. 
 
 
 
in CA 2262/08 
M/s Asghar & Son (Pvt) Ltd. 
 
 
 
in CA 2263/08 
Muhammad Saleem 
 
 
 
 
in CA 2264/08 
M/s Jawad Traders  
 
 
 
 
in CA 2265/08 
Misbahuddin Zaighum 
 
 
 
 
in CA 2266/08 
Saifuddin Moazzam 
 
 
 
 
in CA 2267/08 
Muhammad Iqbal  
 
 
 
 
in CA 2268/08 
M/s Highland Travel (Pvt) Ltd.  
 
 
in CA 2269/08 
Muhammad Faheem Qureshi  
 
 
in CA 2270/08 
M/s Muhammad Amin 
 
 
 
 
in CA 2271-74/08 
Rashid Ahmad 
 
 
 
 
 
in CA 2275-76/08 
Abid Hassan Minto 
 
 
 
 
in CA 2277-78/08 
Suleman Zafar Siddiqui  
 
 
 
in CA 2289/08 
Masood Ali Khan  
 
 
 
 
in CA 2280/08 
M/s N.B. Modaraba Management Co. Ltd.  
in CA 2281-92/08 
Sultan Hussain Batalvi  
 
 
 
in CA 2293/08 
M/s Ansari Variety Store  
 
 
 
in CA 2294/08 
M/s Time & Tune Lahore  
 
 
 
in CA 2295/08 
M/s Rehman A Fitting & Pipe Ind.  
 
 
In CA 2296/08 
M/s Nadeem Zoki, Photographer 
 
 
in CAs 2297-98/08 
M/s Pak Forest Industries (Pvt) Ltd.  
 
in CA 2299/08 
Sikandar Gulzar   
 
 
 
 
in CA 2300-01/08 
Shahid Hussain 
 
 
 
 
 
in CA 2302/08 
Salman Hussain Batalvi  
 
 
 
in CA 2303/08 
M/s Empire Developers   
 
 
 
in CA 2304/08 
M/s Mian Aftab Ahmad  
 
 
 
in CA 2305/08 
M/s S.B. Tools  
 
 
 
 
 
in CA 2306/08 
M/s Pak. Pink Carpets (Pvt) Ltd. 
 
 
in CA 2307/08 
M/s Mechanized Construction of Pakistan  
in CA 2308/08 
M/s Fine Steel Mills  
 
 
 
 
in CA 2309/08 
M/s Punjab Surgical Sale Centre  
 
 
in CA 2310/08 
M/s Continental Banking (Pvt) Ltd. 
 
 
in CA 2311/08 
 
CA No. 1322 of 2007 
 
(On appeal from the judgment passed by Lahore High Court, 
Lahore in W.P. No. 3474/03) 
 
C.B.R. thru. Its Chairman and others  
 
Appellants 
Versus 
M/s Siara Industries 
 
 
 
 
Respondent 
CA 778-2005 ETC 
 
10 
 
CAs No. 115-118 of 2008 
 
(On appeal from the judgment dated 24.9.07 passed by 
Peshawar High Court, Peshawar in TR Nos. 32-35/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Muhammad Alam Fertilizers  
 
 
Respondent in all 
 
CA No. 1491 of 2008 
 
(On appeal from the judgment dated 10.4.08 passed by 
Lahore High Court, Lahore in PTR No.147/05) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Sultan Trading Company  
 
 
…Respondent 
 
CAs No.7-9 2008 
 
(On appeal from the judgment dated 22.10.08 passed by 
Peshawar High Court in TRs No.61-63/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Frontier Sugar Mills  
 
 
Respondents in all 
 
CAs No. 1984- 2046 of 2007 
 
(On appeal from the judgment dated 18.5.07 passed by 
High Court of Sindh at Karachi in ITRA Nos. 42-70/07, 
126-128/07, 129-140/07, 142-147/07, 170-171/07,187-
195/07, 120-121/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
 
A.C.B. (Pvt) Ltd. 
 
 
 
 
Resp. in CA 1984/07 
M/s B.M.A Capital Management 
 
 
in CA 1985-86/07 
M/s Invest Capital & Security (Pvt) Ltd. 
 
in CA 1987-88/07 
M/s Al-Khalid Security Services, Ltd.  
 
in CA 1989-91/07 
M/s Hyder Security Services (Pvt) Ltd. 
 
in CA 1992-95/07 
M/s Defender Security Services  
 
 
in CA 1996-98/07 
M/s Zim’s Security (Pvt) Ltd. 
 
 
 
in CA 1999-2000/07 
M/s Modaraba Al-Tijarah  
 
 
 
in CA 2001-03/07 
M/s Beep Guard (Pvt) Ltd. 
 
 
 
in CA 2004-06/07 
M/s Mars Security Services (Pvt) Ltd.  
 
in CA 2007-10/07 
M/s Plastiko Industries (Pvt) Ltd. 
 
 
in CA 2011-12/07 
M/s Ahmed Estate (Pvt.) Ltd.  
 
 
in CA 2013/07 
M/s Ibrahim Agencies (Pvt) Ltd. 
 
 
in CA 2014-15/07 
M/s National Institutional Facilitation   
 
in CA 2016-18/07 
M/s Shamsher Security Guards (Pvt) Ltd. 
 
in CA 2019-22/07 
CA 778-2005 ETC 
 
11 
M/s Safety & Security (Pvt) Ltd. 
 
 
in CA 2023-26/07 
M/s Farid Construction   
 
 
 
in CA 2027-32/07 
M/s Noor Muhammad Shahzada & Co. 
 
in CA 2033/07 
M/s Steelex (Pvt) Ltd. 
 
 
 
 
in CA 2034/07 
M/s Shafique Textile Mills (Pvt) Ltd.  
 
in CA 2035/07 
M/s Security Two Thousand (Pvt) Ltd. 
 
in CA2036-39/07 
Agha Irshad Ahmad Khan 
 
 
 
in CA 2040/07 
Nobel Security Operation (Pvt) Ltd. 
 
 
in CA 2041-42/07 
Riaz Ahmad Tata  
 
 
 
 
in CA 2043/07 
M/s Butt Sons Fisheries   
 
 
 
in CA 2044-45/07 
M/s Ibrar Shoes Industries 
 
 
 
in CA 2046/07 
 
CAs No. 291-292 of 2008 
 
(On appeal from the judgment dated  31.10.2007 passed 
by High Court of Sindh, Karachi in ITRA No.149-150) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
 
M/s Islam Oil Mills  
 
 
Resp.  
in CA 291-92/08 
 
CAs No. 1099-1101 of 2008 
 
(On appeal from the judgments dated 10.4.2008 passed 
by Lahore High Court, Multan Bench in PTR No.9-11/08 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Mst. Nusrat Sultana 
 
 
 
Respondents in all 
 
Civil Petitions No.12-13 of  2009 
 
(On appeal from the judgment dated 23.9.08 passed by 
Peshawar High Court, Peshawar In TR Nos. 33-34/08) 
 
The Commissioner of Income Tax  
 
 
… Appellant 
Versus 
Hakim Abdul Waheed Afghani Dawakhana  
… Respondent in all 
 
CAs No. 30-32 of 2009 
 
(On appeal from the judgment dated 31.10.2008 .passed 
by High Court of Sindh, Karachi in IRTA Nos. 985-86/08 
and 397/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Lahmayar International  
 
 
Resp. in CA 30-31/09 
M/s Meezan Bank (Pvt) Ltd. 
 
 
 
in CA 32/09 
 
 
 
CA 778-2005 ETC 
 
12 
CAs No. 33-57 of 2009 
 
(On appeal from the judgment dated 23.9.2008 passed 
by Lahore High Court, Lahore in PTR Nos.17-19/08, 
31/08, 77-78/08, 147-150, 206/09, 226-31/08, 264-68/08, 
384/08, 399-400/08) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
 
M/s Ali Bricks Company  
 
 
 
in CA 33-34/09 
M/s Saleemi Brothers Khad Dealer 
 
 
in CA 35/09 
M/s Tatrapack Pakistan Ltd. 
 
 
 
in CA 36/09 
M/s Iftikhar Ahmad printers  
 
 
 
in CA 37/09 
M/s Haji Corporation 
 
 
 
 
in CA 38/09 
M/s Master Traders Khad Dealers 
 
 
in CA 39/09 
M/s Haroon Textile Industries  
 
 
in CA 40/09 
M/s Zafar Iqbal Printers  
 
 
 
in CA 41/09 
M/s Amjad Autos   
 
 
 
 
in CA 42/09 
M/s Mughal Industries   
 
 
 
in CA 43/09 
M/s Pattoki Sugar Mills  
 
 
 
in CA 44-49/09 
M/s Umar Fabrics   
 
 
 
 
in CA 50-54/09 
M/s Madina Autos  
 
 
 
 
in CA 55/09 
M/s Rana Faisal Rauf  
 
 
 
 
in CA 56/09 
M/s Sarfraz & Co.  
 
 
 
 
in CA 57/09 
 
CAs No. 112-113 of 2009 
 
(On appeal from the judgment dated 4.11.08 passed by 
Peshawar High Court, Peshawar in TR No.108-109/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Jack & Jell Public School 
 
 
 
Respondent in all 
 
CAs No. 122-123 of 2009 
 
(On appeal from the judgment dated 6.11.2008, passed 
by Peshawar High Court, Peshawar in TR No.84, 98/06) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Haji Muhammad Amin 
 
 
 
Resp. in CA 122/09 
Nisar Ahmad  
 
 
 
 
 
in CA 123/09 
 
CAs No. 163-164 of 2009 
 
(On appeal from the judgment dated 9.4.2008 passed 
by Islamabad High Court, in ITR Nos.842-843/08) 
 
The Commissioner of Income Tax  
 
 
…Appellant  
 
Versus 
CA 778-2005 ETC 
 
13 
 
M/s Agriculture Development Bank 
 
Resp. in CA 163/09 
M/s Sun Gas (Pvt) Ltd.  
 
 
 
in CA 164/09 
 
CAs No.281-283 of 2009 
 
(On appeal from the judgment dated 1.12.2008 & 
19.11.08 passed by Peshawar High Court, Peshawar in 
TR No.21/07, 74-75/07) 
 
The Commissioner of Income Tax  
 
 
…Appellant 
Versus 
M/s Allied Pak Industries (Pvt) Ltd. 
 
Resp. in CA 281/09 
M/s Abasin Auto Store 
 
 
 
 
in CA 282-83/09 
 
CAs No.1102-1110 of 2008 
 
(On appeal from judgment dated 10.4.08, passed by 
Lahore High Court, Multan Bench in PTR Nos. 12/08, 
1/08, 14-16/08, 25/07, 127/07, 175-176/07, 9-10/08, 
11/07) 
 
Commissioner of Income Tax  
 
 
…Appellant 
Versus 
Sheikh Asghar Mehmood 
 
 
Resp. in CA 1102/08 
M/s Umar Khalid & Co.  
 
 
 
in CA 1103/08 
M/s Punjab Printing Mills (Pvt) Ltd. 
 
 
in CA 1104-06/08 
M/s Dawchem (Pvt) Ltd.  
 
 
 
in CA 1107/08 
Muhammad Umar  
 
 
 
 
in CA 1108/08 
M/s International Manpower Lahore  
 
in CA 1109-10/08 
 
For the appellants/: 
 
Sardar Muhammad Latif Khan Khosa 
petitioners  
 
 
Attorney General for Pakistan  
assisted by 
Sardar Muhammad Ghazi, DAG 
Mr. Zubair Khalid, ASC 
Mr. Abdul Waheed, ASC 
Sardar Shahbaz Khosa, Advocate 
 
 
 
 
 
 
Mr. Muhammad Ilyas Khan, Sr. ASC 
 
 
 
 
 
(C.As. No.803-864, 912-1039, 2251-2311,  
 
 
 
 
 
874-894/2008) 
 
 
 
 
 
 
Mr. M.Bilal, Sr. ASC 
 
 
 
 
 
Ch. Akhtar Ali, AOR.  
 
 
 
 
 
(C.As. No. 163-164/2009) 
 
 
 
 
 
 
Raja Muhammad Bashir, Sr. ASC 
Mr. Mehr Khan Malik, AOR 
(C.As. No.291-292, 1149 & 1150/2008) 
 
Mr. Akhtar Ali Mehmood, ASC 
CA 778-2005 ETC 
 
14 
(in CA 876-79/05, 1602/06, 1617-1619/06, 
587-593/07, 1381-1395/07) 
 
Mr. A.S.K. Ghauri, AOR  
(CA 778/05, 1601/06, 1608-1614, 1616, 
1624, 1625, 2670-73, 2686-87/06, 585-86, 
1369-1377, 1379-1404, 1984-2046/07,  
459-501/08 
 
Mr. Shahid Jameel, ASC 
(in CA 707/07, 33-57/09, CPs 12-13/09,  
 
Mr. M.S. Khattak, AOR. 
(in CA 707/07, 112-113, 122-123/09 and, 
CPs 12-13/09) 
 
 
 
 
 
 
Mr. Muhammad Farid, ASC 
(C.As. No. 1620-1624/2006) 
 
 
 
 
 
 
Syed Arshad Hussain, ASC 
(C.A. No.2673/2006) 
 
Hafiz Muhammad Idrees, ASC 
(CA 355/09) 
 
 
 
 
 
 
Raja Abdul Ghafoor, ASC/AOR 
(C.P. No. 1245/2008 & C.As. No. 
1322/2007, & 115-118 & 1491-1513/2008   
 
 
 
 
 
Mr. Mehmood A. Sheikh, ASC/AOR 
(C.A. No.7-9/2009) 
 
Ch. Akhtar Ali, AOR 
(CA 1604-1607, 1615, 2677-2682/06, 590, 
591, 594/07, 783-791/08) 
 
Mr. Mumtaz Ahmed, Member (Legal), FBR 
 
 
 
 
 
 
Nemo.  
 
 
 
 
 
(in the remaining cases) 
 
 
 
 
 
 
For the respondents: 
 
Mr. Mansoor-ul-Arifin, Sr. ASC  
 
 
 
 
 
 
(C.As. No. 876-879/2005) 
 
 
 
  
 
 
 
 
Mr. Israr-ul-Haq, ASC  
(CA 32/09 
 
 
 
 
 
 
 
Mr. Rehan Hassan Naqvi, ASC  
 
& Ms. Lubna Pervez, ASC 
(CA 1611-15/06, 587/07) 
 
Mr. Badar Villani, ASC 
 
 
 
(CA  459/08) 
CA 778-2005 ETC 
 
15 
 
Mr. Umar Mehmood  Kasuri, ASC 
 
(CAs 865, 901, 902 & 914/08) 
 
Mr. Salman Akram Raja, ASC  
Mr. Ejaz Muhammad Khan AOR: 
 
(CAs 50-54/09) 
  
 
Mr. Sirajuddin Khalid, ASC 
 
 
(CAs 826, 837-839, 1025-1027/08 
 
Dr. Farough Naseem, ASC 
 
 
(CA 1602/06) 
 
Mr. Muhammad Rashid Qamar, ASC  
(CA 163/09) 
 
Mr. Noor Muhammad Chandio, ASC  
(CA 895-900/08) 
 
Kh. Ibrar Majal, ASC 
 
 
 
(CAs 966-968/08) 
 
Mr. Zaeem-ul-Farooq Malik, ASC 
 
(CA 926/08) 
 
Mr. Hamid Shabbir Azar, ASC  
 
(CA 848/08) 
 
Qari Abdur-Rashid, ASC  
 
 
Ch. Muhammad Akram, AOR 
 (CA 2261/08) 
 
Syed Naveed Andrabi, ASC 
 
 
Mr. Faizur Rehman, AOR 
(CA 778/05 & 941-944/2008) 
 
Mr. Shafqat Mehmood Chohan, ASC  
Mian Muhammad Akhtar, ASC 
(CA 669, 670, 919,928, 962, 2263/08   
 & 38,39/09 
 
Mr. Farhat Nawaz Lodhi, ASC 
(C.P. No. 1245/2008) 
 
Mr. Hakam Qureshi, ASC 
 
 
 
Ch. Akhtar Ali, AOR 
(CA 1149/08) 
  
Mr. Fauzi Zafar, ASC 
 
 
 
(CA 921, 952-960/08) 
 
Mr. Abdul Rehman Siddiqui, ASC 
 
CA 778-2005 ETC 
 
16 
Mr. Arshad Ali Chaudhry, AOR  
(CA 475-77 & 89/08) 
  
 
Mr. Muhammad Shoaib Abbasi, ASC  
Mr. G.N. Gohar, AOR 
(CA 115-118/08) 
 
Mr. Irfan Ahmad Sheikh, ASC  
(CA 923-924/2008) 
 
 
Mr. Iqbal Suleman Pasha, ASC  
(CA 1625,2684/06 & 592-93, 1369, 2007-
2010, 2016-18/07 & 1847-1849/08) 
 
Mr. Shahbaz Butt, ASC  
(CAs 841, 856-858, 891,911,916,971, 972, 
1002, 1003, 1099, 1100, 1502, 1505-1512, 
2281, 2292, 2114-2115/2008, 36/09 & CP 
12/09) 
 
Mr. Muhammad Iqbal Hashmi, ASC  
Mr. Faizur Rehman, AOR 
(CAs 825,854, 1008-1010, 1013-15, 1111, 
1491, 1500, 1501, 2264, 2304/08) 
 
Ms. Edwina Williams (in person) 
 
(CAs 112-113/09) 
  
Nemo  
 
 
 
 
 
(in the remaining cases) 
 
 
 
 
 
 
Dates of hearing:  
 
15th, 16th, 17th, 21st, 22nd and 28th  
 
 
 
 
 
 
April & 4th, 5th, 11th & 19th May, 2009 
 
JUDGMENT 
 
 
 
IFTIKHAR MUHAMMAD CHAUDHRY, C.J. – In Civil Appeals 
No. 876 to 879/2005, leave to appeal was granted, inter alia, to examine 
whether the provision contained in subsection (5A) of section 122 of the 
Income Tax Ordinance, 2001, (hereinafter referred to as the Ordinance) 
inserted w.e.f. 1st July 2003 was procedural in nature and was 
retrospective in operation or otherwise.  
2. 
 
The above four appeals arise out of a judgment of the Sindh 
High Court passed in Constitution Petitions No. D-643 to D-646 of 2004. 
CA 778-2005 ETC 
 
17 
The respondent M/S Honda Shahra-e-Faisal, an association of persons, 
namely, Shaikh Afzal Maqbool, Shaikh Mubashir Maqbool and Shaikh 
Amjad Maqbool, respondents in Civil Appeals No. 877, 878 & 879 of 2005 
derived income from sale of spare parts and workshop receipts. The 
assessments in respect of the aforesaid respondents pertaining to the 
assessment year 2002-2003 were finalized on 20.05.2003 under section 
59(1) of the Income Tax Ordinance, 1979 (hereinafter referred to as the 
repealed Ordinance). The Additional Commissioner of Income Tax, Range-
II, Companies Zone-I, Karachi initiated proceedings under section 122 (5A) 
of the Ordinance calling upon the respondents to show cause as to why 
the above finalized assessments be not amended. Aggrieved thereof, the 
respondents filed Constitution Petitions before the High Court of Sindh 
taking the plea that since subsection (5A) of section 122 was inserted by 
the Finance Act, 2003 dated 17.06.2003, effective from 01.07.2003, 
therefore, the same could not be given retrospective effect and 
consequently it would not be applicable to the assessments finalized 
before 01.07.2003. The learned High Court, vide its judgment dated 
02.03.2005 (hereinafter to be referred to as the Honda Shahra-e-Faisal) 
allowed the petitions and held that the provision contained in subsection 
(5A) of section 122 of the Ordinance, inserted with effect from 01.07.2003 
was not retrospective in operation. It was held that the assessments 
finalized before the said date could not be reopened/revised/ amended in 
exercise of the jurisdiction conferred upon the income tax authorities under 
the above provision. Thus, the impugned notices were declared to be 
without jurisdiction, illegal and void ab initio and were quashed along with 
the relevant proceedings, hence the above appeals by the department by 
leave of this Court. 
CA 778-2005 ETC 
 
18 
3. 
 
The Constitution Petitions, which are the subject-matter of 
C.As. No. 1601 to 1603 of 2006 were also filed in the High Court of Sindh 
against the issuance of show cause notices in more or less similar 
circumstances and were decided on the basis of Honda Shahra-e-Faisal. 
4. 
 
Civil Appeals No. 1604 to 1625, 2670 to 2683, & 2685 to 2687 
of 2006; 585 to 595, 706, 707, 1369 to 1404, & 1984 to 2046 of 2007; 291, 
292, 459 to 499, 870 & 1847 to 1849 of 2008, 30 to 32 of 2009 also arise 
out of judgments of the High Court of Sindh passed in the tax references 
filed by the appellants. Here too, the judgment in Honda Shahra-e-Faisal 
was followed.  
5. 
 
Civil Appeals No. 803 to 839 of 2008 arise out of judgments of 
the Lahore High Court, Multan Bench delivered in the tax references filed 
before it on the following question of law: -  
 
“Whether on the facts and circumstances of the case, the 
learned ITAT was justified in holding that section 122(5) of the 
Income Tax Ordinance, 2001 brought into statute through Finance 
Act, 2003 is not applicable to the assessments completed before the 
promulgation of the Income Tax Ordinance, 2001, whereas the 
amendment brought in through Finance Ordinance, 2002 in 
subsection (1) of section 122 extends the applicability of section 122 
to the assessments completed under the provisions of the Income 
Tax Ordinance, 1979 as well.” 
 
6. 
 
Vide judgment dated 2.4.2008, a learned Division Bench of 
the Lahore High Court at Multan, following the law laid down in Honda 
Shahra-e-Faisal answered the aforesaid question in the affirmative and 
held that section 122(5A) did not have retrospective effect qua the 
assessments finalized before 1.7.2002, and as such could not be 
reopened/revised or amended in the exercise of jurisdiction under section 
122(5A) of the Ordinance. Resultantly, the tax references were rejected.  
CA 778-2005 ETC 
 
19 
7. 
 
Civil Appeals No. 840 to 1039, 1104 to 1127, 1491 to 1513, 
2257 to 2311 of 2008, 7 to 9, 33 to 57 of 2009 arise out of judgments of the 
Lahore High Court, Lahore delivered in the tax references filed before it 
wherein it was held that the assessment orders framed by the Deputy 
Commissioner of Income Tax could not be amended or modified under any 
of the two subsections, namely (5) and (5A) of section 122 of the 
Ordinance. It was further held that the language of section 122 applied 
only to assessment orders finalized by the Commissioner in respect of the 
taxpayers for the tax year and not to the assessment orders made by the 
DCIT for the assessment years 2002-2003 and earlier. All the tax 
references were rejected.  
8. 
 
Civil Appeal No. 1322 of 2007 arises out of judgment of the 
Lahore High Court, Lahore passed in Writ Petition filed against the show 
cause notice issued to the respondent. In this case, the Lahore High Court 
held that the impugned show cause notice, which was issued under the 
Ordinance as amended by SRO No.633(I)/2002 dated 14.9.2002 was not 
sustainable in law after the above SRO was declared ultra vires the 
Ordinance by this Court in the case of Commissioner of Income Tax v. 
Kashmir Edible Oils Ltd (2006 SCMR 109). It was also held that the 
subsequent insertion of these amendments through the Finance Act, 2003 
also did not cure the illegality of the amendments made in the Ordinance 
through the said SRO. It was noted that the impugned show cause notice 
could not be issued under the Ordinance as it existed at the time of its 
enforcement, i.e., prior to any amendments whether made under the SRO 
or the Finance Act, 2003. As such, the impugned show cause notice was 
declared to be illegal and of no legal effect.    
CA 778-2005 ETC 
 
20 
9. 
 
Civil Appeals No. 1148 to 1150 and 1245 of 2008 arise out 
judgments of the Lahore High Court, Rawalpindi Bench delivered in the tax 
references filed before it wherein it was held that the Ordinance applied to 
the tax year commencing from 1.7.2002. The provisions of section 122(5) 
as on that date neither covered the assessments finalized under the 
repealed Ordinance nor the operation of law was made retrospective in 
various corresponding provisions. The new law was more favourable to the 
taxpayers as against the revenue department terms, which was apparent 
from the terms, such as ‘taxpayer’ vis-à-vis ‘assessee’.  
10. 
 
Civil Appeals No. 500, 501 & 783 to 791 of 2008, and 163 and 
164 of 2009 arise out of judgments of the Islamabad High Court, delivered 
in the tax references filed before it. The learned Islamabad High Court 
disposed of the tax references in the light of the law laid down in Honda 
Shahra-e-Faisal. 
11. 
 
Civil Appeals No. 115 to 118 of 2008, 112, 113, 122, 123 & 
281 to 283 of 2009 and Civil Petitions No. 12 & 13 of 2009 arise out of 
judgments of the Peshawar High Court, delivered in the tax references 
filed before it. The learned Peshawar High Court adhered to the exposition 
of law made by the Sindh and the Lahore High Courts and held that 
subsection (5A) of section 122 of the Ordinance inserted with effect from 
1.7.2003 was not applicable to the assessments finalized before 1.7.2003 
because subsection (5A) had no retrospective effect and, therefore, the 
assessments 
finalized 
before 
1.7.2003 
could 
not 
be 
reopened/revised/amended in exercise of jurisdiction under section 122 
(5A) of the Ordinance.  
12.  
 
In the appeals arising out of the judgments of the High Courts 
(Lahore High Court, Lahore, Multan, Rawalpindi & Bahawalpur Benches, 
CA 778-2005 ETC 
 
21 
Islamabad High Court and the Peshawar High Court) leave was granted by 
this Court to examine, inter alia, the scope, effect and validity of 
subsections (1), (5), (5A) of section 122 of the Ordinance inserted w.e.f. 
1.7.2003 by the Finance Act, 2003.  
13. 
  
To illustrate the factual mattress upon which the tax 
references were founded, we narrate here the facts of one case from the 
Multan Bench. The assessments in respect of Khalid Javaid, respondent in 
C.A. No. 803/2008 relating to years 1998-1999, 1999-2000 & 2002-2003, 
completed on 30.10.2000, 29.9.1999 and 15.1.2003 respectively, were 
framed and finalized under section 62 of the repealed Ordinance before 
1.7.2002, i.e. the date on which the Ordinance was enforced. The IAC 
concerned issued show cause notice dated 19.6.2004 to the respondent 
for imposition of correct amount of tax for the aforesaid years under 
section 122(5) of the Ordinance. The respondent challenged the show 
cause notice in appeal before the Commissioner of Income Tax (Appeals), 
Multan. In his order dated 29.3.2005, the Commissioner, placed reliance 
on the judgment of the High Court of Sindh in Honda Shahra-e-Faisal, 
allowed the appeal of the respondent and cancelled the amended 
assessment orders passed under section 122 of the Ordinance. Thus, the 
original assessment orders finalized under section 59 of the repealed 
Ordinance were restored. The Commissioner decided the issue on the 
legal plane and gave no finding on other grounds of appeal. The CIT 
Multan Zone then agitated the matter before the Income Tax Appellate 
Tribunal, Lahore Bench, but without any success and the order of the 
Commissioner was upheld. The CIT Multan Zone thereafter filed tax 
reference (TR No. 10/2007) before the Lahore High Court, Multan Bench 
with the following question of law for determination by the said Court: -  
CA 778-2005 ETC 
 
22 
 
“Whether on the facts and circumstances of the case, the 
learned ITAT was justified in holding that section 122(5) of the 
Income Tax Ordinance, 2001 brought into statute through Finance 
Act, 2003 is not applicable to the assessments completed before the 
promulgation of the Income Tax Ordinance, 2001, whereas the 
amendment brought in through Finance Ordinance, 2002 in 
subsection (1) of section 122 extends the applicability of section 122 
to the assessments completed under the provisions of the Income 
Tax Ordinance, 1979 as well.” 
 
14. 
 
Vide judgment dated 2.4.2008, a learned Division Bench of 
the Lahore High Court, Multan Bench, following the law laid down in Honda 
Shahra-e-Faisal answered the aforesaid question in the affirmative and 
held that section 122(5A) had no retrospective effect qua the assessments 
finalized before 1.7.2002 and as such could not be reopened/revised or 
amended in the exercise of jurisdiction under section 122(5A) of the 
Ordinance. Resultantly, the tax references were rejected. It is noteworthy 
that all the cases were decided on the legal issue and not a single case 
was decided on merits.   
15. 
 
The moot point in these appeals is the retrospective 
application or otherwise of the provisions of section 122(1), (5) & (5A) of 
the Ordinance. A common contention of the learned counsel for the 
appellants was that the High Courts were not right in holding that the said 
provisions had no retrospective effect. According to the learned counsel, 
the said provisions were procedural in nature, they did not create any 
charge or levy any tax and merely dealt with the machinery of 
assessment, therefore, as held in Commissioner of Income Tax v. 
Mahaliram Ramjidas (AIR 1940 Privy Council 124), in interpreting 
provisions of this kind the rule was that such construction should be 
preferred which made the machinery workable.  
CA 778-2005 ETC 
 
23 
16. 
 
Mr. M. Ilyas Khan, learned counsel for the appellants in C.A. 
No. 803/2008 contended that section 122(1) as amended by the Finance 
Ordinance, 2002 was part of the Ordinance from the very date of 
enforcement, i.e. 1.7.2002. He submitted that subsection (1) was an 
enabling provision and the power of amendment conferred therein was to 
be exercised subject to other provisions of section 122 while subsections 
(5) & 5A) were procedural in nature and non-charging provisions but were 
to be read in conjunction with subsection (1), which explicitly provided for 
the amendment of assessment already finalized under the repealed 
Ordinance. He submitted that reference to various sections of the 
repealed Ordinance in subsection (1) of section 122 of the Ordinance 
clearly showed the intention of the legislature to apply the provision 
relating to amendment of assessment retrospectively with the rider that an 
assessment could be amended subject to time-limits provided in 
subsections (2) & (4A). Subsection (5A) of section 122 would be attracted 
on fulfillment of the twin conditions, namely, the erroneousness of the 
assessment and its being prejudicial to the interest of revenue to the 
assessments relating to the income year ending on or before 30.6.2002 
finalized before 1.7.2003 under the repealed Ordinance, the date of 
insertion of the above subsection. On the other hand, if the applicability of 
subsection (5A) were restricted to the orders treated to be issued under 
the Ordinance alone, it would render the words ‘erroneous in so far it is 
prejudicial to the interest of revenue’ a surplusage against the legislative 
intent. Subsections (5) and (5A) were procedural provisions as the same 
fell in Chapter X of the Ordinance, which related to procedure. It was well-
settled principle of interpretation of fiscal statutes that only charging 
provisions would not be given retrospective effect but the procedural 
CA 778-2005 ETC 
 
24 
provisions could well be applied retrospectively. The retrospectivity of a 
statute was either expressly conferred or could be inferred by necessary 
implication therein. The charging provisions were to be construed strictly, 
whereas the procedural provisions were to be interpreted liberally. He also 
pressed into service other principles of interpretation of statutes, namely, 
every word in a statute to be given a meaning, a statute to be read as a 
whole, words to be construed in accordance with the intention, a law 
should be interpreted in such a manner that it should be saved rather than 
destroyed, the courts lean in favour of upholding constitutionality of 
legislation and would be extremely reluctant to strike down laws as 
unconstitutional, 
enactments 
dealing 
with 
procedure 
are 
always 
retrospective in the sense that they apply to the pending proceedings, the 
rule that fiscal statutes should be construed strictly was applicable only to 
a charging provision or a provision imposing penalty, scheme of the law is 
to be examined in its totality in order to arrive at a correct conclusion, no 
provision is to be considered in isolation, court may modify language of 
statute to give effect to manifest and undoubted intention of the 
legislature, procedural matters would not operate retrospectively if they 
touch a right in existence at the time of passing of the legislation, where 
retrospective effect to a statute is not given expressly, one must, apart 
from the language employed, look to the general scope and purview of the 
statute and at the remedy sought to be applied and consider what was the 
former state of the law, and what was that the legislature contemplated, 
etc. He referred to Halsbury’s Laws of England, vol. 36, 3rd edition, p. 423, 
Craies on Statute Law, fifth edition, p. 370, 371, Maxwell’s Interpretation 
of Statutes, p. 228, Hakim Khan v. Government of Pakistan (PLD 1992 SC 
595), etc. He further argued that with the repeal of the Ordinance (of 
CA 778-2005 ETC 
 
25 
1979), no right was accrued to or conferred upon the assessees nor had 
they acquired any right inasmuch as section 122(1) clearly provided that 
the assessments made or deemed to have been made were open to 
amendment within a specified time-limit. Erroneous assessment 
prejudicial to the interest of revenue could not be termed a past and 
closed transaction. He submitted that the Commissioner was the authority 
empowered to amend or further amend an assessment, and though he 
was empowered to delegate his powers or functions under section 210, 
but by virtue of amendment made in the said section by insertion of 
subsection (1A), he was debarred from delegating his powers of 
amendment of assessment contained in subsection (5A) of section 122 to 
a taxation officer below the rank of Additional Commissioner of Income 
Tax.  He further submitted that the power of amendment envisaged under 
subsection (5) was original in nature while the one under subsection (5A) 
was revisional in nature. He adopted the reasoning of a learned Single 
Judge of the High Court of Sindh in the case of Fauji Oil Terminal and 
Distribution Co. Ltd. Karachi v. Additional Commissioner/Taxation Officer 
(2006 PTD 734) that once an assessment order was treated as issued 
under section 120 or was actually issued under section 121, then the 
same could be amended or further amended on fulfillment of conditions 
specified in subsection (5) only and on no other ground, and that 
subsections (1), (3) and (5) were to be read together and not in isolation. 
He lastly submitted that the assessees or the taxpayers were not fair in 
disclosing their true incomes. There were countless cases of concealed 
income, etc. The assessees were not prepared to face the realities and 
instead of approaching the department, they filed writ petitions in the High 
CA 778-2005 ETC 
 
26 
Courts against the law laid down in Pak Arab Fertilizers (Pvt.) Ltd. v. 
Deputy Commissioner Income Tax (2000 PTD 263).  
17. 
 
Mr. Akhtar Ali Mehmood, ASC, learned counsel for the 
appellant in C.A. No. 876/2005 submitted that retrospectivity of the 
provisions of the Ordinance was evident from the actions being taken 
according to the scheme of the said Ordinance. In support of his 
submission, the learned counsel placed reliance on an order of the 
Commissioner of Income Tax whereby he delegated powers to the 
Taxation Officers (Additional Commissioner, etc.) passed after the 
enforcement of the Ordinance. He further referred to the case of 
Commissioner of Income Tax, Multan v. Munazza Iqbal, the subject-
matter of C.As. No. 805 & 806 of 2008 in which relief was allowed to the 
respondent, though the case was not covered by SRO No. 633(I)/2002 
dated 14.9.2002. He also placed on record a copy of the order dated 
13.1.2009 passed by this Court in the case of Commissioner (Legal 
Division), Large Taxpayer Unit v. M/S Shaheen Air International (C.Ps. 
No. 511-K to 513-K of 2008 decided on 13.01.2009). This case related to 
rectification of assessment orders under section 221 of the Ordinance, 
passed on 25.10.1999 in respect of assessment years 1997-98 and 1998-
99 as well as the assessment order dated 25.5.2000, in respect of 
assessment year 1999-00. In this case, the appellate authority as well as 
the Income Tax Appellate Tribunal had taken the view that the provisions 
of section 221 were applicable to assessments made after the 
enforcement of the Ordinance and therefore the power of rectification 
could only be exercised within the time-limit of four years laid down in 
section 156 of the repealed Ordinance.  
CA 778-2005 ETC 
 
27 
18. 
 
Mr. Shahid Jamil Khan, ASC, learned counsel for the 
appellant submitted that under sections 65 and 66A of the repealed 
Ordinance read with section 6 of the General Clauses, 1897 an 
assessment could be amended, revised or reassessed subject to the 
provisions of law where it was found that the exact or proper tax, levied 
under the charging section, was not assessed, and no sanctity was 
attached to the assessment orders. The taxpayer did not have any vested 
right in a case of escaped income, or an erroneous assessment, etc. The 
power of the State to levy tax was protected by virtue of section 6 of the 
General Clauses Act, 1897. Section 122 provided machinery for the 
enforcement of charging provisions, therefore, the same were not debarred 
from being applied retrospectively. He relied upon the case of Nawabzada 
Muhammad Amir Khan  (PLD 1961 SC 119) to emphasize that it was the 
duty of the Court to protect the right of the State by having recourse to the 
principles of harmonious construction and reconciling the conflicting 
provisions, or by curing the flaws in the language employed by the 
lawmaker. He referred to Salmon v. Duncombe (11 AC 634) where it was 
held that the machinery sections were to be liberally construed and if the 
incidence of tax was clear, the machinery sections should be so construed 
as to make the realization of the proper tax possible. He submitted that the 
defects in the language of the law could not be made a basis to defeat the 
intention of the legislature or to prevent the realization of tax that was in 
fact due.  
19. 
 
Mr. M. Bilal, Sr. ASC for the appellants in C.A. No. 163-
164/2009 and Raja Abdul Ghafoor, ASC/AOR for the petitioner in C.P. No. 
1245/2008 & and appellants in C.As. No. 1322/2007, & 115-118 & 1491-
CA 778-2005 ETC 
 
28 
1513/2008 adopted the arguments advanced by M/S M. Ilyas Khan and 
Akhtar Ali Mehmood, ASCs. 
20. 
 
Syed Naveed Andrabi, ASC for the respondent in C.A. No. 
778 of 2005 made the following submissions: - 
(1) 
At the time of promulgation of the Ordinance, about 1000 
amendments were made to make the new law in line with the 
repealed Ordinance. The entire complexion of the law was 
changed 
(2) 
Subsection 1 of section 122 of the Ordinance was an 
independent provision which had no nexus with subsection (5-
A);  
(3) 
The pending proceedings initiated under the provisions of the 
repealed Ordinance were saved under subsection (4) of 
section 239 of the Ordinance; and  
(4) 
Vested rights had accrued to the assessees before the 
enforcement of the Ordinance, 2001, hence, the income tax 
authorities, under the Ordinance, 2001 did not have any lawful 
authority to reopen the assessment orders passed in favour of 
the assessees by the authorities under the repealed 
Ordinance. Reference was made to the cases of Kashmir 
Edible Oil Ltd v. Federation of Pakistan [2005 (91) Tax 480 
Lahore] = 2005 PTD 1621 and United Builders Corporation, 
Mirpur v. Commissioner Income-tax, Govt. of Azad J & K 
(1984 PTD 137) = 49 (tax) 34. 
 
21. 
 
Mr. Mansoorul Arifin, ASC, learned counsel for the respondent 
in C.A. No. 876 to 879 of 2005, supporting the impugned judgment of the 
High Court of Sindh in Honda Shahra-e-Faisal, made the following 
submissions: -  
(1) 
The Ordinance, as originally promulgated, brought about 
change in its approach towards and treatment of the taxpayers 
by introducing a liberal tax regime, e.g., under section 120 of 
the Ordinance, where a taxpayer furnished a return of income, 
CA 778-2005 ETC 
 
29 
the Commissioner shall be taken to have made an 
assessment of the taxable income. This changed approach lay 
at the foundation of the Ordinance and was the touchstone to 
judge the validity of the subsequent actions;   
(2) 
The provisions of section 122 clearly showed that the 
legislature, through a conscious application of mind, kept 
outside the ambit of the provisions of the Ordinance the 
assessments of the period ending on 30.6.2002. It was only 
through an arbitrary amendment process, undertaken through 
the Finance Ordinance, 2002, the SRO dated 14.9.2002 and 
the Finance Act, 2003 that the assessments of the period 
preceding the enforcement of the Ordinance were brought 
within its pale; 
(3) 
Subsection (5A) was applicable to the tax year 2003 and 
onward because the Ordinance was operative from 1.7.2002, 
therefore, the same could not be applied to the assessments 
of the period preceding its enforcement unless the law 
specifically so provided. Reference was made to the cases of 
Calcutta Discount Co. v. Income-Tax Officer [(1952) 21 ITR 
579 (Calcutta)], Niranjanlal Ramballabh v. Commissioner of 
Income-Tax, 
Madhya 
Pradesh 
[(1953) 
23 
131)], 
Commissioner of Income-Tax v. Maharaja Pratap Singh 
Bahadur [(1956) 30 ITR 484 (Patna)], Chairman, Central 
Board of Direct Taxes v. V.S. Malhotra [(1981) 129 ITR 543 
(Delhi)] and N.S. Bindra’s Interpretation of Statutes, Eighth 
Edition 1997, p. 628;  
(4) 
The Commissioner was empowered to amend an assessment 
by insertion of subsection (5) by means of SRO No. 
633(I)/2002 dated 14.9.2002, but the same ceased to have 
effect after the said SRO was rescinded by SRO No. 
608(I)/2003 dated 24.6.2003 in pursuance of the judgment of 
this Court in the case of Kashmir Edible Oils Ltd (supra); 
(5) 
There was nothing in section 239, which indicated that the 
legislature intended to revive section 66A of the repealed 
Ordinance, hence the subsequent amendments introduced in 
section 122 with a view to achieving the same object were of 
CA 778-2005 ETC 
 
30 
no legal effect, hence proceedings initiated under section 
122(5A) in respect of the assessments completed under the 
repealed Ordinance were unlawful, which were also hit by the 
principle of past and closed transactions; and 
(6) 
Subsection (5) was not a mere procedural provision, which 
could be applied retrospectively. Rather, the said provision, if 
applied retrospectively, would affect the accrued rights of the 
assessees, hence the same would be prospective in its 
operation.  Reference was made to an order passed by this 
Court in an unreported case titled Inspecting Additional 
Commissioner of Income Tax v. Zakaria H.A. Sattar Bilwani, 
Karachi (C.P. No. 643-K to 647 of 2007 decided on 15.7.2008) 
wherein it was held that vested rights accruing to an assessee 
in respect of assessments for the years 1988-89 and 1989-90 
finalized on 29.6.1989 and the assessments of 1990-91 and 
1991-92 finalized before 30.6.1992 could not be taken away in 
exercise of powers conferred by an amending provision, 
namely, section 17B of the Wealth Tax Act, 1963 effective 
from 30.6.1992.  
 
22. 
 
Dr. Farough Naseem, learned counsel for the respondent in 
C.A. No. 1602/2006 raised the following contentions: -  
(1) 
The substantive laws would always be prospective while the 
procedural matters would be retrospective, but where the 
procedural laws affected past and closed transactions or 
existing, accrued, concluded, vested or substantive rights, the 
same would not be retrospective unless and until the statute 
expressly provided for retrospective application of the law. 
Thus, the power to revise or reopen any concluded 
assessment envisaged in subsections (5) or (5A) of section 
122 of the Ordinance could not be applied retrospectively. He 
referred to a number of judgments of the superior Courts of 
Pakistan and India, including Adnan Afzal v. Capt. Sher Afzal 
(PLD 1969 SC 187), Mushtaq Ahmed v. District Manager, 
Govt. Transport Service (1982 SCMR 965), WAPDA v. Capt. 
CA 778-2005 ETC 
 
31 
Nazir Hussain (1986 SCMR 96), Glaxo Laboratories Ltd. V. 
Inspecting Assistant Commissioner of Income Tax (PLD 1992 
SC 549), Mrs. Anjuman Shaheen v. Inspecting Assistant 
Commissioner of Income Tax (1993 PTD 1113 & 1232), 
Monnoo Industries Ltd v. C.I.T. (2001 PTD 1525), Delhi Cloth 
and General Mills Ltd v. Income Tax Commissioner, Delhi 
(AIR 1927 PC 242), etc; 
(2) 
Reopening/ revision/amendment of assessments was penal in 
nature as the process would expose the taxpayers to penal 
consequences, hence the issue fell within the domain of 
substantive law and was not a matter of mere procedure. On 
that account, the principles governing interpretation of penal 
provisions would be applicable in the matter of amendment, 
reopening or revision of concluded assessments;  
(3) 
It was well-settled that if there was any doubt about 
prospectivity or retrospectivity of a particular provision, the 
Court would resolve it in terms of prospectivity; 
(4) 
The provision of section 34 of the Income Tax Act, 1922 was 
not pari materia with section 122(5A). The case of Mahaliram 
Ramjidas (supra) was incorrectly relied upon by the appellants 
as the Privy Council did not decide the issue of retrospectivity 
of section 34 of the Income Tax Act, 1922; 
(5) 
A bare reading of the entire section 122 would show that sub-
section (4) of section 122 pertained to the amendment under 
subsection (1) or subsection (3), while in subsection (5) 
reference was only made to the amendment under subsection 
(1) or the further amendment under sub-section (4). Again in 
subsection (6), the legislature had consciously made a 
distinction between amended orders passed under subsection 
(1), subsection (4) or subsection (5-A), clearly establishing 
that the intention of the legislature was to create distinct 
categories. Hence the inescapable conclusion was that sub-
section (1) was independent from subsection 122 (5-A). This 
was further endorsed from a reading of subsection (5-B), 
which specified a time-limit for the action under subsection (5-
A). Time-limit under subsection (1) was not made applicable to 
CA 778-2005 ETC 
 
32 
subsection (5-A). This would thus again endorse the 
contention that sub-section (5-A) was a category completely 
distinct from subsection (1). This was also established from 
the fact that the provision of sub-section (5-A) only was made 
subject to the provision of sub-section (9) and not subsection 
(1). 
 
23. 
 
Mr. Shafqat Mehmood Chohan, ASC, learned counsel for the 
respondents in C.A. No. 669/2008 etc., made the following submissions: - 
(1) 
It is necessary to see the scheme of law regarding 
assessment year and the assessee. This law was enforced on 
1st July, 2002. According to subsection (3) of section 1 of the 
Ordinance, the Ordinance of 1979 was to be repealed on the 
date the former came into force as envisaged by section 238;  
(2) 
The Ordinance was applicable to the activities of the 
assessment year commencing from 1.7.2002 and not to the 
activities of the period preceding its enforcement when the 
previous law was holding the field;  
(3) 
Under section 122, only the Commissioner was the competent 
authority to amend an assessment or to further amend an 
amended assessment whereas the impugned notices were 
issued by officers of the income-tax department below the 
rank of the Commissioner, therefore, the notices were not 
issued competently;  
(4) 
This section imposed additional liability, hence, it was a penal 
section creating charge itself because it was different from the 
previous section i.e. section 66A according to which taxpayer 
meant any representative of a person who derived an amount 
chargeable to tax under the repealed Ordinance;  
(5) 
Every assessment order could not be amended, so while 
touching the rights of the taxpayer or assessee, there were 
two conditions, so these conditions itself spoke about the 
rights of an assessee; and 
CA 778-2005 ETC 
 
33 
(6) 
Section 5-A was pari materia with section 66A and the 
limitation under the repealed Ordinance for section 66A was 
four years from the date of the order sought to be revised.  
24. 
 
Mr. M. Iqbal Hashmi, ASC, learned counsel for the 
respondents in C.A. No. 825/2008 etc., argued as under: -  
(1) 
Section 122(1) authorized the Commissioner to amend 
assessment orders passed under sections 59, 59A, 62, 63 
and 65 of the repealed Ordinance;  
(2) 
The amendment of assessment involved computation of 
taxable income, which, in respect of period ending on or 
before 30.6.2002 was to be done under the repealed 
Ordinance by virtue of subsection (1) of section 239 of the 
Ordinance. Thus, in case of any conflict between an earlier 
and a later provision, more specifically between section 
122(1) and section 239(1), the subsequent provision would 
prevail;  
(3) 
By virtue of section 122(8), section 122(5) would be 
applicable to income chargeable under the Ordinance as the 
definition of ‘definite information’ did not include the income 
chargeable under the repealed Ordinance in it; and  
(4) 
The alternative submission of the learned counsel was that 
the appeals be remanded to the Income Tax Appellate 
Tribunal, as the same were decided, not on merits, but on the 
legal issue, viz., the prospective applicability of section 
122(1), (5) or (5A).  
 
25. 
 
Mr. Sirajuddin Khalid, ASC, learned counsel for the 
respondents in C.A. No. 826/2008 etc., filed copies of notices issued by 
the Inspecting Additional Commissioner of Income Tax under section 122 
of the Ordinance in respect of assessment years 1995-96, 1996-97, 2000-
01. He made the following arguments: - 
(1) 
Amendment of assessment or reassessment was alien to the 
provisions of section 122 of the Ordinance up to the 
assessment year 2002-03;  
CA 778-2005 ETC 
 
34 
(2) 
The words ‘tax’, ‘taxable income’, and ‘taxpayer’ used in 
subsection (6), as defined in section 2(63), 2(64) & (266) of 
the Ordinance did not include the period of assessment 
occupied by the repealed Ordinance. Thus, the assessments 
of the period up to the repeal of the Ordinance of 1979 did not 
fall within the scope of section 122 of the Ordinance;  
(3) 
By virtue of section 239(1), the provisions of the repealed 
Ordinance relating to computation of total income and tax 
payable thereon shall apply as if the Ordinance had not come 
into force. Therefore, the power to amend an assessment 
envisaged in section 122(1), (5) or (5A) of the Ordinance 
would not be available in respect of the assessment orders 
passed under the repealed Ordinance;  
(4) 
Section 122(1) would be invoked only if an assessment order 
was issued or treated as issued;  
(5) 
The assessment order treated as issued under section 120 or 
issued under section 121 sought to be amended must be an 
order of the Commissioner, but if such order merged into an 
appellate or revisional order, then it would not be amenable to 
the provisions of section 122(5A); and 
(6) 
The orders passed in appeal, revision or reference would be 
outside the purview of section 122(5A) as the Ordinance did 
not contain any provision parallel to subsection (1A) of 
section 66A of the repealed Ordinance.   
 
26. 
 
Mr. Shahbaz Butt, ASC, learned counsel for the respondents 
in C.A. No. 841/2008 etc., filed written submissions along with a 
comparative chart of different provisions of the income tax laws, i.e. The 
Income Tax Act, 1922, the repealed Ordinance and the Ordinance, the 
Ordinance as per its original text when it was enforced, the amendments 
made through the Finance Ordinance, 2002, the amendments made 
through SRO No. 633(1)/2001 dated 14.09.2002, the amendments made 
CA 778-2005 ETC 
 
35 
through the Finance Ordinance, 2002 and the Finance Act, 2003. He made 
the following arguments: -  
(1) 
Notwithstanding the amendment made in subsection (1) of 
section 122, or the addition of subsection (5) or subsection 
(5A), the provisions of section 122 could not be invoked in 
respect of income year ending on 30th June, 2002;  
(2) 
Subsections (1), (2) and (3) of section 239, as originally 
enacted, specifically related to the income year ending on 30th 
June, 2002 while subsection (4) thereof related specifically to 
pending proceedings; 
(3) 
Subsection (2) of section 239 laid down that in making 
assessment in respect of any income year ending on or before 
the 30th day of June 2002, the provisions of the repealed 
Ordinance relating to the computation of total income and the 
tax payable thereon shall apply as if this Ordinance had not 
come into force;  
(4) 
The key word ‘assessment’ was defined in both the 
Ordinances, i.e. the repealed Ordinance as well as the 
Ordinance (of 2001). The word ‘assessment’ as substituted by 
the Finance Ordinance, 2002, included ‘re-assessment’ and 
‘amended assessment’, which being the cognate expressions, 
were to be construed accordingly. If the above definition was 
read with section 239(1), it would indicate that an amended 
assessment would also fall within the connotations of 
assessment and shall apply accordingly; 
(5) 
The words “to ensure that the taxpayer is liable for the correct 
amount of tax for the tax year to which the assessment order 
relates” occurring in section 122(1) of the Ordinance were 
omitted by means of the Finance Act, 2003. The said words 
referred to the charging provision as contained in the 
Ordinance where a charge was created on the basis of tax 
year as compared to assessment year used in the repealed 
Ordinance; 
(6) 
Section 239 (1), (2) and (3) created charge in accordance with 
the provisions of the repealed Ordinance. Subsection (1) of 
CA 778-2005 ETC 
 
36 
section 239 specifically stated that the computation of total 
income and tax payable thereon shall be that of the repealed 
Ordinance. Therefore, any charge thus created would be dealt 
with under the provisions of the repealed Ordinance and not 
under the Ordinance (of 2001); 
(7) 
The power of amendment given in subsection (1) of section 
122 was not an independent power for the reason that the 
provisions of this section were controlled by its opening words 
“subject to this section”.  Further, this section, as it existed till 
the tax year ending on 30th June 2003, was addressed to the 
taxpayer, which was alien to the income tax proceedings 
under the repealed Ordinance, and when it created charge, it 
addressed to the tax year, which was an alien connotation to 
the income tax proceedings under the repealed Ordinance. 
Thus, in this background, the charge created through 
amendment in respect of a tax year, was missing in respect of 
an assessment year;  
(8) 
Keeping in view the original text of subsection (5), as it stood 
at the time of enforcement of the Ordinance, the assessments 
completed under any of sections 59, 59A, 62, 63 or 65 of the 
repealed Ordinance were not covered by it;  
(9) 
Though such assessments were brought within the scope of 
subsection (5) by means of SRO No. 633(I)/2002 dated 
14.9.2002, yet after its rescission by SRO No. 608(I)/2003 
dated 24.6.2003, the same fell out of the scope of subsection 
(5); and  
(10) 
Given the definition of ‘taxpayer’ in section 2(66) of the 
Ordinance, an assessee as defined in section 2(6) of the 
repealed Ordinance was alien to the provisions of section 122, 
hence the same did not apply to an assessee within the 
contemplation of the repealed Ordinance, particularly so when 
the 
two 
terms, 
‘taxpayer’ 
and 
‘assessee’ 
were 
not 
interchangeable. Thus, the relevant provisions did not have 
retrospective effect.  
 
CA 778-2005 ETC 
 
37 
27. 
 
Mr. Muhammad Shoaib Abbasi, ASC for the respondents in 
C.A. 115-118/2008 submitted that his case was covered by section 
122(5A) and the relevant provisions could not be given retrospective effect. 
He adopted the arguments of Mr. Shahbaz Butt.  
28. 
 
Mr. Izharul Haq Siddiqui, ASC for the respondents in C.A. 
No.475-477/2008 adopted the arguments advanced on behalf of the 
respondents. 
29. 
 
Mr. Hamid Shabbir Azar, ASC for the respondent in C.A. 
No.846/2008 submitted that his case was covered by section 122(5A). He 
adopted the arguments of the learned counsel for the respondents.  
30. 
 
Mr. Irfan Ahmed Sheikh, ASC for the respondent in C.A. No. 
923-924/2008 submitted that the definition of assessment included re-
assessment under section 2(5) read with section 239(1) & (2) and its 
application could not be attracted to the cases in which assessments had 
already been finalized.  
31. 
 
Mr. Hakam Qureshi, ASC learned counsel for the respondent 
in C.A. No. 1149/2008 adopted the arguments of Mr. Muhammad Iqbal 
Hashmi. He stated that when there were two or more interpretations, then 
in fiscal laws, the Court would adopt the interpretation favouring the 
taxpayer.  
32. 
 
The learned Attorney General for Pakistan appeared on behalf 
of the Federal Government and filed concise statement. He stated that 
there would be no governance system at all in the country if the incomes 
were not properly assessed and the taxes not collected, causing prejudice 
to the public revenues. He argued as under: -  
(1) 
No vested rights had accrued to the assessees in the matter 
of reopening, revising or amending of their assessments of the 
CA 778-2005 ETC 
 
38 
pre-2001 Ordinance period as nobody could be allowed to 
gain premium on his mala fide acts, such as incorrect or 
collusive assessments, concealed income, etc;  
(2) 
The impugned provisions were meant to modify the charge of 
tax offered by a taxpayer/assessee to actual tax chargeable 
and payable and to crystallize the correct charge as per the 
charging sections where there was mistake or error, or 
evasion, mis-declaration, tax fraud, or wrong application of law 
resulting in inaccurate charge of tax made, in the return of 
income;  
(3) 
It was not a new concept, but was there in the Income Tax Act 
1922 (sections 34 & 34A) as well as in the repealed Ordinance 
(sections 65 & 66A) and was now on the statute book in the 
form of section 122 of the Ordinance;  
(4) 
Correction of assessment in favour of the taxpayer through 
rectification, appeal or revision was provided in sections 221, 
127, 122A of the Ordinance. However, as no right of appeal 
was provided to the revenue department against an erroneous 
order of the tax authority, though the taxpayer had such right, 
errors of judgment operating against the revenue department 
would continue without remedy if provision like section 122 
were not introduced;  
(5) 
Subsections (5), (5A) and (9) laid down the parameters within 
which such powers would be exercised. Subsections (2), (4), 
(4A) and (5B) provided time limits and subsection (8) 
restricted the meaning of “definite information”, as used in 
sub-section (5) ibid. Thus, the legislature did not cast any 
additional burden, any new charge or duty on the subject, it 
merely clarified that amendment could be made on fulfillment 
of twin conditions of erroneousness and prejudice to the 
revenue;  
(6) 
Similar provisions on amending the duty and taxes 
assessment were also available in the Customs Act (S.32) 
and the Sales Tax Act 1990 (Section 36). If a “person” paid tax 
with the return of income based on proper computation of total 
income, and proper application of tax rate; there is then no 
CA 778-2005 ETC 
 
39 
issue as no appeal, no amendment, and no correction will be 
needed, as it would be accurate charge of tax;  
(7) 
Subsections (5) and (5A) of section 122 were non-charging 
sections and were procedural in nature, therefore, the same 
were retrospective in operation;  
(8) 
These provisions were also to be read in conjunction with 
section 122(1) which provided explicitly amendment of 
assessment already finalized under the repealed Ordinance; 
and  
(9) 
The provisions of subsections (5) or (5A) were not pari materia 
to sections 65 or 66A of the repealed Ordinance, though 
certain conditions were transported into the said subsections. 
But, in any case, the two sets of provisions were different, 
inasmuch as the IAC could cancel or annul an assessment 
under section 66A, but the Commissioner could not pass such 
an order under subsection (5A);  
(10) The application of the tax rate was protected under section 
239(1) of the Ordinance, and same tax rate was applicable in 
respect of the assessments amended under the provisions of 
section 122; 
(11) The case law on the issue of retrospectivity referred to by the 
learned counsel for the respondents was not relevant.    
 
33. 
 
We have heard the learned Attorney General for Pakistan and 
the learned counsel for the parties and have gone through the relevant 
case law cited by them at the bar.  
34. 
 
It may be observed that the Ordinance is the third major 
enactment governing the taxation laws. It was preceded by the Income Tax 
Ordinance, 1979, repealed on the enforcement of the Ordinance on 
1.7.2002, and the Income Tax Act, 1922, one of laws adapted under the 
Indian Independence Act, 1947 on the eve of creation of Pakistan, which in 
turn was repealed by the Ordinance of 1979. The Preamble to the 
Ordinance states that it is expedient to consolidate and amend the law 
CA 778-2005 ETC 
 
40 
relating to income tax and to provide for matters ancillary thereto or 
connected therewith. The decision of these appeals turns mainly on the 
true construction of section 122 of the Ordinance.  We, therefore, undertake 
a brief survey of the legislative process, through which the provisions of 
this section have passed in taking their present shape and form, insofar 
the same is relevant for the purposes of adjudication of the controversy 
raised in these appeals. Section 122, as incorporated in the Income Tax 
Ordinance, 2001 (Ordinance No. XLIX of 2001) provided as under: -  
“122.  Amendment of assessments.- (1) Subject to this section, the 
Commissioner may amend an assessment order treated as issued 
under section 120 or issued under section 121 by making such 
alterations or additions as the Commissioner considers necessary to 
ensure that the taxpayer is liable for the correct amount of tax for the 
tax year to which the assessment order relates. 
 
(2)  
An assessment order shall only be amended under subsection 
(1) within five years after the Commissioner has issued or is treated 
as having issued the assessment order on the taxpayer. 
 
(3)  
Where a taxpayer furnishes a revised return under subsection 
(6) of section 114 - 
 
(a)  the Commissioner shall be treated as having made an 
amended assessment of the taxable income and tax 
payable thereon as set out in the revised return; and  
 
(b)  
the taxpayer’s revised return shall be taken for all 
purposes of this Ordinance to be an amended 
assessment order issued to the taxpayer by the 
Commissioner on the day on which the revised return 
was furnished. 
 
(4)  
Where an assessment order (hereinafter referred to as the 
“original assessment”) has been amended under subsection (1) or 
(3), the Commissioner may further amend, the original assessment 
within the later of – 
 
(a)  
five years after the Commissioner has issued or is 
treated as having issued the original assessment order 
to the taxpayer; or 
 
(b) 
one year after the Commissioner has issued or is 
treated as having issued the amended assessment 
order to the taxpayer. 
 
CA 778-2005 ETC 
 
41 
(5)  
An assessment order shall only be amended under subsection 
(1) and an amended assessment for that year shall only be further 
amended under subsection (4) where the Commissioner – 
 
(a) 
is of the view that this Ordinance has been incorrectly 
applied in making the assessment (including the 
misclassification of an amount under a head of income 
to claim tax relief, an incorrect claim for exemption of 
any amount or an incorrect claim for a refund; or  
 
(b) 
has definite information acquired from an audit or 
otherwise that the assessment is incorrect.  
 
(6) As soon as possible after making an amended assessment 
under subsection (1) or (4), the Commissioner shall issue an 
amended assessment order to the taxpayer stating – 
 
(a)  
the amended taxable income of the taxpayer; 
(b) 
the amended amount of tax due; 
(c)  
the amount of tax paid, if any; and 
(d)  
the time, place, and manner of appealing the amended 
assessment. 
 
(7)  
An amended assessment order shall be treated in all respects 
as an assessment order for the purposes of this Ordinance, other 
than for the purposes of subsection (1). 
 
(8)  
For the purposes of this section, “definite information” includes 
information on sales or purchases of any goods made by the 
taxpayer, and on the acquisition, possession or disposal of any 
money, asset, valuable article or investment made or expenditure 
incurred by the taxpayer.  
 
 
 
In pursuance of section 1(3) of the Ordinance, it came into force w.e.f. 
1.7.2002. By the Finance Ordinance1, 2002, enacted simultaneously with 
effect from the same date, i.e. the date of enforcement of the Ordinance, 
the following amendments2 were made in section 122: - 
In subsection (1), the words and figures “or issued under 
section 59, 59A, 62, 63 or 65 of the repealed Ordinance, were 
inserted.   
 
                                                 
1 Printed as “Act” in the Income Tax Manual published by the Federal Board of Revenue. The National 
Assembly was not in existence at the relevant time, so no Act could be passed.  
2 Large scale amendments were made in the Ordinance overall.  
CA 778-2005 ETC 
 
42 
[The Commissioner’s power to amend an assessment was also 
made applicable to the assessments orders passed under certain 
sections of the repealed Ordinance.] 
Words “as many times as may be necessary” were inserted in 
subsection (4)  
 
[The scope of power of amendment of assessments made under 
subsection (1) or (3) was enlarged.]  
35. 
 
By SRO No.633(I) /2002 dated 14.9.2002, the following new 
subsection (4A) was inserted into section 122: - 
“An amended assessment shall only be made within six years 
of the date of original assessment. 
 
[Six years’ time-limit from the date of the original assessment was 
provided for an amended assessment, by which expression it 
appears that the original assessment could be amended by the 
Commissioner within a period of six years]  
In subsection (5), in clause (a), after the word “Ordinance”, the 
words “or the repealed Ordinance” were inserted.  
 
[Thus, the assessments of pre-2001 Ordinance period were 
included.] 
  
In subsection (5), in clause (b), for the words “assessment is 
incorrect” the words “income has been concealed or 
inaccurate particulars of income have been furnished or the 
assessment is otherwise incorrect” were substituted.  
 
 
[The scope of amendment of assessment was stated.] 
 
After subsection (5), new subsection (5A) was also inserted into section 
122: - 
“5(A) Where a person does not produce accounts and 
records, or details of expenditure, assets and liabilities or any 
other information required for the purposes of audit under 
section 177, or does not file wealth statement under section 
116, the Commissioner may, based on any available 
information and to the best of Commissioner’s judgment; 
make an amended assessment.”  
CA 778-2005 ETC 
 
43 
 
[Certain eventualities were provided where the Commissioner may 
pass an amended assessment order.] 
 
In pursuance of the judgment of this Court in the case of Kashmir Edible 
Oils Ltd3 (supra), the aforesaid SRO was rescinded by SRO No.608 (I) 
/2003 dated 24.6.2003 with which the amendments made in the Ordinance 
stood withdrawn.  
36. 
 
The Ordinance was next amended by the Finance Act, 
2003.The amendments introduced in section 122 are as under: - 
The words “to ensure that the taxpayer is liable for correct 
amount of tax for the tax year to which the assessment order 
relates” were omitted from subsection (1). 
 
New subsection (4A) was inserted as under: - 
 
“(4A)  In respect of an assessment made under the repealed 
Ordinance, nothing contained in subsection (2) or, as the case 
may be, subsection (4) shall be so construed as to have 
extended or curtailed the time-limit specified in section 65 of 
the aforesaid Ordinance in respect of an assessment order 
passed under that section and the time-limit specified in that 
section shall apply accordingly. 
 
[The time-limit already provided in section 65 of the repealed 
Ordinance was incorporated into the statute with respect to the 
assessment orders passed under that section. In fact, the 
amendment earlier brought about by the SRO dated 14.9.2002 was 
reincorporated with a change in the time-limit]   
Subsection (5) was substituted as follows: - 
 
“(5)  An assessment order in respect of tax year, or an 
assessment year, shall only be amended under sub-section 
(1) and an amended assessment for that year shall only be 
further amended under sub-section (4) where, on the basis of 
definite information acquired from an audit or otherwise, the 
Commissioner is satisfied that – 
 
                                                 
3 Discussed in later part of the judgment to see its effect on the issues involved in these appeals.  
CA 778-2005 ETC 
 
44 
(i)  
any income chargeable to tax has escaped 
assessment; or 
(ii)  
total income has been under-assessed, or 
assessed at too low a rate, or has been the 
subject of excessive relief or refund; or 
(iii)  
any amount under a head of income has been 
misclassified.” 
 
[A part of the provisions of section 65 of the repealed Ordinance, 
earlier not included in the Ordinance, was brought on the statute 
book in the form of this subsection, that is to say, the grounds for 
additional assessment given in that section, were enacted here. To 
this extent, the provisions of section 65 and subsection (5) are pari 
materia.] 
New subsection (5A) was inserted as under: - 
 
“(5A) Subject to sub-section (9), the Commissioner may 
amend, or further amend, an assessment order, if he 
considers that the assessment order is erroneous in so far it is 
prejudicial to the interest of revenue.” 
 
[The Commissioner was empowered to amend or further amend an 
assessment 
on 
two 
other 
considerations, 
namely, 
the 
erroneousness of an assessment, or its being prejudicial to the 
interest of revenue. An assessment earlier amended under section 
65 of the repealed Ordinance was also made liable to be amended 
or further amended under this subsection. While exercising power 
under this subsection, taxpayer was to be provided with an 
opportunity of hearing as provided in subsection (9) To the extent of 
the grounds provided under this subsection for amending or further 
amending an assessment, this subsection is pari materia with 
section 66A of the repealed Ordinance.] 
  
New subsection (5B) was inserted as under: - 
 
“(5B) Any amended assessment order under sub-section (5A) 
may be passed within the time-limit specified in sub-section 
(2) or sub-section (4), as the case may be.” 
 
[Time-limits provided earlier were made applicable to amendment of 
assessments to be made under subsection (5A).] 
CA 778-2005 ETC 
 
45 
 
Words and figures “subsection (1), subsection (4) or subsection (5A)” were 
added in subsection (6).  
[The amended assessment order in terms of subsection (6) was to 
be issued in three categories, namely, amended assessment order 
passed under subsections (1), (4), or (5A). Amended assessments 
orders passed under subsection (3) would not be required to be 
issued in terms of subsection (6)]   
 
In subsection (8), the words, “receipts of the taxpayer from services 
rendered or any other receipts that may be chargeable to tax under this 
Ordinance” were added. Thus, the phrase “definite information” was further 
elaborated. 
37. 
 
A perusal of the overall provisions of section 122, as amended 
from time to time, shows that the Commissioner is empowered to amend 
an assessment order by making such alterations or additions as he 
considers necessary. The power of amendment is to be exercised in the 
manner provided in section 122, which stipulates certain restrictions on the 
exercise of such power.  The power of amendment can be exercised in 
respect of an assessment order treated as issued under section 120 or 
issued under section 121, or issued under section 59, 59A, 62, 63 or 65 of 
the repealed Ordinance. The assessment order can be amended within 
five years after the Commissioner has issued or is treated as having 
issued the assessment order on the taxpayer while an amended 
assessment order can be amended or further amended within a period of 
one year after the Commissioner has issued or is treated as having issued 
the amended assessment order to the taxpayer. The time limit provided in 
section 65 of the repealed Ordinance would be available in respect of an 
assessment order passed under that section. Under subsection (5), an 
CA 778-2005 ETC 
 
46 
assessment shall only be amended, or an amended assessment shall only 
be further amended on the basis of definite information acquired from an 
audit or otherwise, where the Commissioner is satisfied that any income 
chargeable to tax has escaped assessment, or total income has been 
under-assessed, or assessed at too low a rate, or has been the subject of 
excessive relief or refund, or any amount under a head of income has 
been misclassified. So, there has to be definite information with the 
Commissioner, e.g. information on sales or purchases of any goods made 
by the taxpayer, receipts of the taxpayer from services rendered or any 
other receipts that may be chargeable to tax under the Ordinance and on 
the acquisition, possession or disposal of any money, asset, valuable 
article or investment made or expenditure incurred by the taxpayer. Such 
information must have been received from a certain source. Such 
information must stipulate a case of escaped assessment, under-
assessment, assessment at too low a rate, excessive relief or refund, or 
misclassification of a head of income. Subsection (5A) also empowers the 
Commissioner to amend, or further amend an assessment order if he 
considers that the assessment order is erroneous in so far it is prejudicial 
to the interest of revenue, but before doing that, he shall provide the 
taxpayer with an opportunity of being heard. Power to amend or further 
amend an assessment order is also subject to the time-limit of five years or 
one year.  
38. 
 
At this stage, it is necessary to have a glance at the provisions 
of section 239, the savings clause of the Ordinance because in the context 
of transition to a new phase of law, particularly where an existing law is 
repealed, the savings clause is always of pivotal nature, inasmuch as it 
CA 778-2005 ETC 
 
47 
serves as a bridge to make the transition smooth. Subsections (1), (2) and 
(3) of section 239, as originally enacted, provided as under: - 
 
“(1) 
The repealed Ordinance 1979 shall continue to apply to 
the assessment year ending on the 30th day of June 2003. 
(2) 
In making any assessment in respect of any income 
year ending on or before the 30th day of June 2002, the provisions of 
the repealed Ordinance relating to the computation of total income 
and the tax payable thereon shall apply as if this Ordinance had not 
come into force.    
 
(3) 
Where any return of income has been furnished by a 
person for any assessment year ending on or before the 30th day of 
June 2003, proceedings for the assessment of the person for that 
year shall be taken and continued as if this Ordinance has not come 
into force. “ 
 
The above subsections were amended by the Finance Ordinance, 2002 as 
under:- 
 
“(1) 
Subject to subsection (2), in making any assessment in 
respect of any income year ending on or before the 30th day of June, 
2002, the provisions of the repealed Ordinance in so far as these 
relate to computation of total income and tax payable thereon shall 
apply as if this Ordinance had not come into force.  
 
(2) 
The assessment, referred to in subsection (1), shall be 
made by an income tax authority which is competent under this 
Ordinance to make an assessment in respect of a tax year ending 
on any date after the 30th day of June, 2002, and in accordance with 
the procedure specified in section 59 or 59A or 61 or 62 or 63, as 
the case may be, of the repealed Ordinance. 
 
(3) 
The provisions of subsections (1) and (2) shall apply, in 
like manner, to the imposition or charge of any penalty, additional 
tax or any other amount, under the repealed Ordinance, as these 
apply to the assessment, so however that procedure for such 
imposition or charge shall be in accordance with the corresponding 
provisions of this Ordinance.” 
 
CA 778-2005 ETC 
 
48 
Thus, as per original subsection (1) of section 239 –  
(i) 
The repealed Ordinance was applicable to assessment year 
ending on 30th June, 2003;  
(ii) 
The repealed Ordinance governed the computation of total 
income and the tax payable thereon in respect of any income 
year ending on or before the 30th day of June 2002; and  
(iii) 
The repealed Ordinance was applicable to proceedings in 
respect of assessment for the year ending on or before the 
30th day of June 2003. 
 
After the aforesaid amendment brought about by the Finance Ordinance, 
2002, the authority competent to make an assessment in respect of a tax 
year ending on or before the 30th day of June, 2002 under the Ordinance 
was empowered to make an assessment in respect of a tax year ending on 
any date after the 30th day of June, 2002, in accordance with the 
procedure specified in sections 59, 59A, 61, 62 or 63 of the repealed 
Ordinance. The imposition or charge of any penalty, additional tax or any 
other amount, under the repealed Ordinance would also be governed by 
the aforesaid provisions. In subsection (2) of section 239, assessments 
under sections 59, 59A, 62 or 63 were referred to [whereas in subsection 
(1) of section 122, apart from the assessments under sections 59, 59A, 62 
or 63, assessment under section 65 of the repealed Ordinance was also 
included.]  
39. 
 
According to the learned counsel for the respondents, the 
previous laws envisaged additional assessment where any income 
chargeable to tax had escaped assessment, or was under assessed, or 
assessed at too low a rate, or was the subject of excessive relief (section 
34 of the Income Tax Act, 1922 and section 65 of the repealed Ordinance). 
It was contended that the provisions of subsection (5) of section 122 in 
CA 778-2005 ETC 
 
49 
particular were pari materia with the provisions of section 65 of the 
repealed Ordinance to that extent, and the legislature being aware of the 
previous state of the law, consciously did not enact a similar provision in 
section 122(1) as originally enacted and also omitted to save section 65. 
Therefore, subsequent reference to that section, or for that matter, the 
other sections of the repealed Ordinance, in section 122(1) was of little 
significance. They vehemently contended that section 65 having not been 
saved, the provisions of section 122(1), and particularly the provisions of 
subsections (5) and (5A) could not be applied retrospectively so as to 
reopen, revise or amend the assessments finalized under the repealed 
Ordinance. On the other hand, the learned counsel for the appellants 
stated that lacuna, if any, in the savings clause stood cured with the 
amendment of subsection (1) of section 122 and introduction of subsection 
(5).   
40. 
 
We have given our anxious consideration to this aspect of the 
matter. To facilitate an easy analysis, the three provisions are juxtaposed 
with the help of the following comparative chart: -  
 
 
COMPARATIVE CHART OF CORRESPONDING PROVISIONS  
 
Income Tax 
Act, 1922 
Section 34 
Income Tax 
Ordinance, 1979 
Section 65 
Income Tax Ordinance 2001 
Section 122 
34. 
Income 
escaping 
assessment: 
If 
for 
any 
reason income, 
profits or gains 
chargeable 
to 
income-tax 
have escaped 
assessment in 
any 
year 
or 
have 
been 
assessed 
at 
too low a rate, 
or have been 
65. 
Additional 
assessment.- (1) If, in 
any 
year, 
for 
any 
reason,- 
(a) 
any 
income 
chargeable 
to 
tax 
under this Ordinance 
has 
escaped 
assessment; or 
 
(b) the total income of 
an assessee has been 
under 
assessed, 
or 
assessed at too low a 
rate, or has been the 
122.  Amendment of assessments.- (1) 
Subject to this section, the Commissioner 
may amend an assessment order treated as 
issued under section 120 or issued under 
section 121, or issued under section 59, 
59A, 62, 63 or 65 of the repealed Ordinance, 
by making such alterations or additions as 
the Commissioner considers necessary. 
 
(2)  
An assessment order shall only be 
amended under subsection (1) within five 
years after the Commissioner has issued or 
is treated as having issued the assessment 
order on the taxpayer. 
 
CA 778-2005 ETC 
 
50 
the subject of 
excessive relief 
or refund under 
this 
Act, 
the 
Income-tax 
Officer may, at 
any time within 
one year of the 
end 
of 
that 
year, serve on 
the 
person 
liable to pay 
tax 
on 
such 
income, profits, 
or gains, or in 
the case of a 
company, 
on 
the 
principal 
officer thereof, 
a 
notice 
containing 
all 
or any of the 
requirements 
which may be 
included in a 
notice 
under 
sub-section (2) 
of section 22 
and 
may 
proceed 
to 
assess 
or 
reassess such 
income, profits 
or gains, and 
the provisions 
of 
this 
Act, 
shall, so far as 
may be, apply 
accordingly as 
if 
the 
notice 
were a notice 
issued 
under 
that 
sub-
section: 
Provided 
that 
the tax shall be 
charged at the 
rate at which it 
would 
have 
been charged 
had 
the 
income, profits 
or 
gains 
not 
escaped 
assessment or 
full 
assessment, 
as 
the 
case 
may be:  
 
Provided 
further 
that 
subject of excessive 
relief or refund under 
this ordinance; or 
 
(c) the total income of 
an assessee and the 
tax payable by him has 
been 
assessed 
or 
determined under sub-
section (1) of section 
59 or section 59A or 
deemed to have been 
so 
assessed 
or 
determined under sub-
section (1) of section 
59 or section 59A,  
the 
Deputy 
Commissioner may, at 
any time, subject to the 
provisions 
of 
sub-
sections(2), (3) and (4), 
issue a notice to the 
assessee containing all 
or 
any 
of 
the 
requirements 
of 
a 
notice under section 56 
and may proceed to 
assess or determine, 
by an order in writing, 
the total income of the 
assessee or the tax 
payable by him, as the 
case may be, and all 
the provisions of this 
Ordinance shall, so far 
as 
may 
be, 
apply 
accordingly: 
 
Provided that the tax 
shall be charged at the 
rate or rates applicable 
to the assessment year 
for 
which 
the 
assessment is made. 
 
(2) 
No 
proceedings 
under sub-section (1) 
shall be initiated unless 
definite information has 
come 
into 
the 
possession 
of 
the 
Deputy Commissioner 
and he has obtained 
the previous approval 
of 
the 
Inspecting 
Additional 
Commissioner 
of 
Income Tax in writing 
to do so. 
 
Explanation.- As used 
in 
this 
sub-section, 
"definite 
information" 
(3)  
Where a taxpayer furnishes a revised 
return under sub-section (6) of section 114 - 
 
(a)  
the Commissioner shall be treated as 
having made an amended assessment of the 
taxable income and tax payable thereon as 
set out in the revised return; and  
(b)  
the taxpayer’s revised return shall be 
taken for all purposes of this Ordinance to be 
an amended assessment order issued to the 
taxpayer by the Commissioner on the day on 
which the revised return was furnished. 
 
(4)  
Where 
an 
assessment 
order 
(hereinafter referred to as the “original 
assessment”) has been amended under sub-
section (1) or (3), the Commissioner may 
further amend,1[as many times as may be 
necessary, the original assessment within 
the later of – 
 
(a)  
five years after the Commissioner 
has issued or is treated as having issued the 
original assessment order to the taxpayer; or 
(b) 
one year after the Commissioner has 
issued or is treated as having issued the 
amended assessment order to the taxpayer. 
 
(4A)  
In respect of an assessment made 
under the repealed Ordinance, nothing 
contained in sub-section (2) or, as the case 
may be, sub-section (4) shall be so 
construed as to have extended or curtailed 
the time limit specified in section 65 of the 
aforesaid Ordinance in respect of an 
assessment order passed under that section 
and the time-limit specified in that section 
shall apply accordingly. 
 
(5)  
An assessment order in respect of 
tax year, or an assessment year, shall only 
be amended under sub-section (1) and an 
amended assessment for that year shall only 
be further amended under sub-section (4) 
where, on the basis of definite information 
acquired from an audit or otherwise, the 
Commissioner is satisfied that– 
 
(i)  
any income chargeable to tax has 
escaped assessment; or 
(ii)  
total 
income 
has 
been 
under-
assessed, or assessed at too low a rate, or 
has been the subject of excessive relief or 
refund; or 
(iii)  
any amount under a head of income 
has been misclassified.] 
 
(5A) 
Subject 
to 
sub-section 
(9), 
the 
Commissioner 
may 
amend, 
or 
further 
amend, an assessment order, if he considers 
that the assessment order is erroneous in so 
far it is prejudicial to the interest of revenue. 
 
CA 778-2005 ETC 
 
51 
where 
the 
assessment 
made or to be 
made 
is 
an 
assessment 
made or to be 
made 
on 
a 
person 
deemed to be 
the agent of a 
non-resident 
person 
under 
section 43, no 
notice 
under 
this subsection 
shall be issued 
after the expiry 
of one year of 
the end of that 
year.  
 
Provided 
further 
that 
unless definite 
information has 
come into his 
possession, 
the Income-tax 
Officer 
shall 
not 
initiate 
proceedings 
under 
this 
subsection 
without 
obtaining 
the 
previous 
approval of the 
Inspecting 
Assistant 
Commissioner 
of 
Income-tax 
in writing.  
 
includes information in 
respect of sales and 
purchases, made by 
the assessee, of any 
goods, 
and 
any 
information 
regarding 
acquisition, possession 
or 
transfer, 
by 
the 
assessee, 
of 
any 
money, 
asset 
or 
valuable article, or any 
investment 
made 
or 
expenditure incurred by 
him. 
 
(3) Notice under sub-
section (1), in respect 
of any income year, 
may be issued within 
ten years from the end 
of the assessment year 
in 
which 
the 
total 
income of the said 
income year was first 
assessable:   
 
Provided that, where 
the 
said 
notice 
is 
issued on or after the 
first day of July, 1987, 
this sub-section shall 
have effect as if for the 
words "ten years" the 
words "five years" were 
substituted. 
 
(3A) Where a notice 
under sub-section (1) is 
issued on or after the 
first day of July, 1982, 
no order under the said 
sub-section 
shall 
be 
made 
after 
the 
expiration of one year 
from the end of the 
financial year in which 
such 
notice 
was 
served. 
(5B) Any amended assessment order under 
sub-section (5A) may be passed within the 
time-limit specified in sub-section (2) or sub-
section (4), as the case may be. 
 
(6) As soon as possible after making an 
amended assessment under sub-section (1), 
sub-section (4) or sub-section (5A), the 
Commissioner shall issue an amended 
assessment order to the taxpayer stating – 
 
(a)  
the amended taxable income of the 
taxpayer; 
(b) 
the amended amount of tax due; 
(c)  
the amount of tax paid, if any; and 
(d)  
the time, place, and manner of 
appealing the amended assessment. 
 
(7)  
An amended assessment order shall 
be treated in all respects as an assessment 
order for the purposes of this Ordinance, 
other than for the purposes of sub-section 
(1). 
 
(8)  
For the purposes of this section, 
“definite information” includes information on 
sales or purchases of any goods made by 
the taxpayer, receipts of the taxpayer from 
services rendered or any other receipts that 
may be chargeable to tax under this 
Ordinance,] 
and 
on 
the 
acquisition, 
possession or disposal of any money, asset, 
valuable article or investment made or 
expenditure incurred by the taxpayer.  
 
(9) No assessment shall be amended, or 
further amended, under this section unless 
the taxpayer has been provided with an 
opportunity of being heard.” 
 
 
41. 
 
There is force in the contention of the learned counsel for the 
respondents that the concept of additional assessment on the ground of 
escaped income, etc., as prevalent under the repealed Ordinance, or 
previously under the Income Tax Act, 1922, and also available in other 
jurisdictions (e.g. section 147 of the Indian Income Tax Act, 1961), was not 
legislated under the Ordinance as originally framed and promulgated. It 
CA 778-2005 ETC 
 
52 
appears that the Ordinance was drafted in post haste and the draftsman 
omitted to incorporate this important provision. This observation is 
supported from the fact that the Ordinance was subjected to speedy, 
successive and large scale amendments, particularly at its very inception. 
It may be seen that section 238 provided that the Ordinance shall come 
into force on a date to be appointed by the Federal Government by 
notification in the official gazette. Accordingly, vide notification (SRO No. 
381(I)/2002) dated 16.6.2002, the Ordinance came into force with effect 
from the first day of July 2002, but with more or less 1000 amendments 
inserted by the Finance Ordinance, 2002, as calculated by the learned 
counsel for the respondents. Soon thereafter, the Federal Government, in 
the purported exercise of power under section 240, a provision meant for 
removal of difficulties, came up with SRO No. 633(I)/2002 dated 
14.9.2002, whereby amendments of substantive nature were made in 
different provisions of the Ordinance, e.g. sections 114, 121, 122, 137, 
141, 161, 221 & 239, which changed the entire complexion of the law. The 
SRO also provided that for making any assessment for the year beginning 
on the first day of July, 2002, or making any deduction or collection of tax 
for the year beginning on the last day of July, 2002, the Ordinance would 
have effect accordingly.  
42. 
 
The validity of the aforesaid SRO was called in question in 
various writ petitions filed before the Lahore High Court. A learned Single 
Judge of that Court allowed the writ petitions and declared the SRO in 
question ultra vires the Ordinance. The matter came up for consideration 
before this Court in the case of Kashmir Edible Oils Ltd (supra). This Court 
held that merely because the Federal Government was vested with the 
power to remove the difficulties in giving effect to any of the provisions of 
CA 778-2005 ETC 
 
53 
the Ordinance did not empower the Government to go ahead with making 
amendments or repealing the provisions of the Ordinance. It was held that 
section 240 of the Ordinance had placed an embargo that the order 
passed by the Federal Government for removal of difficulties would not be 
inconsistent with the provisions of the Ordinance. Therefore, the Federal 
Government exceeded its powers of delegated legislation as contemplated 
by section 240 of the Ordinance and thus the said SRO could not co-exist 
with the original provisions of the Ordinance, many of which were sought to 
be amended thereby. However, it was observed that since the question of 
validity and effect of amendment in section 122 of the Ordinance by the 
Finance Act No. 1 of 2003 was not directly involved, therefore, the same 
was not examined in those proceedings.4 It is noteworthy that 
retrospectivity or otherwise of the provisions of section 122 remained 
undetermined by this Court in Kashmir Edible Oils Ltd. (supra). The effect 
of the above decision of this Court on the cases pending either before this 
Court, or before any other authority or Court would be that the proceedings 
initiated in pursuance of the amendments of the SRO period, i.e. 14.9.2002 
to 30.6.2003 would abate, inasmuch the very provisions of the Ordinance 
under which the proceedings were initiated were declared ultra vires and 
rendered null and void ab initio. However, the proceedings initiated on the 
basis of the provisions of the Ordinance, as amended from time to time, 
minus the provisions of the SRO period, would be in the field and subject 
to the decision of these appeals. This consideration in view, the learned 
counsel for the appellants frankly conceded that the appeals relating to the 
SRO period were not competent. They, therefore, requested that C.As. No. 
1617, 1622-1624, 2673 & 2675-2678 of 2006, and C.As. No. 497, 498, 
                                                 
4 Emphasis supplied.  
CA 778-2005 ETC 
 
54 
911, 916, 1002, 1003, & 2282–2292 of 2008 may be allowed to be 
withdrawn. Accordingly, these appeals are dismissed as withdrawn.   
43. 
 
At this juncture, we advert to the questions whether section 
122 of the Ordinance is a procedural or substantive provision, whether it is 
to be applied prospectively or retrospectively, and whether assessees or 
taxpayers have acquired any right that their assessments finalized under 
the repealed Ordinance, being past and closed transactions, shall not be 
opened or amended under this provision? The learned counsel for the 
parties hotly contested the issue, the learned Attorney General for 
Pakistan on behalf of the Federal Government supporting the stance of the 
appellants that the provisions of the section were machinery provisions 
and not substantive as no tax or charge was levied thereby, therefore, the 
same were retrospective in operation and being procedural in nature 
applied to the assessments orders passed under the repealed Ordinance, 
moreso as the assessees had no vested right in the matter of reopening of 
the previous assessments. To resolve these issues, we revert to the case-
law cited at the bar, but would suffice to refer to only some of them in the 
paragraphs next following.  
 
 
44. 
 
In the case of Adnan Afzal v. Capt. Sher Afzal (PLD 1969 SC 
187) the issue before this Court was the applicability of the West Pakistan 
Family Courts Act, 1964 to the proceedings commenced before the Act 
came into force. In holding that the Act brought about only procedural 
changes and did not affect any substantive right, therefore, according to 
the general rule of interpretation, that a procedural statute was to be given 
retroactive effect unless the law contained a contrary indication, Hamoodur 
Rehman, C.J., speaking for the Court, dilated upon the issue as under: - 
CA 778-2005 ETC 
 
55 
“The general principle with regard to the interpretation of statutes as laid 
down in the well known case of the Colonial Sugar Refining Company 
Limited v. Irving (1905 A C 369) is that "if the matter in question be a 
matter of procedure only", the provisions would be retrospective. "On the 
other hand, if it be more than a matter of procedure, if it touches a right in 
existence at the passing of the Act", then "in accordance with a long line 
of authorities extending from the time of Lord Coke to the present day", 
the legislation would not operate retrospectively, unless the Legislature 
had either "by express enactment or by necessary intendment" given the 
legislation retroactive effect. 
To the same effect are the observations of Jessel, master of the Rolls, in 
the case of In re: Joseph Suche & Co. Limited ((1875) 1 Ch. D. 48), where 
it was observed that as "a general rule when the Legislature alters the 
rights of parties by taking away or conferring any right of action, its 
enactments, unless in express terms they apply to pending actions, do not 
affect them. It is said that there is on exception to that rule, namely, that 
these enactments merely affect procedure and do not extend to rights of 
action, they have been held to apply to existing rights." 
The question for consideration there was regarding the right of a secured 
creditor of a company to prove for the full amount of his debt without 
deducting the value of his securities in the course of the winding up. That 
was held to be, in substance, a right of action for the recovery of a debt 
and, therefore, section 10 of the English Judicature Act was held not to 
apply retrospectively. 
The principle has been admirably put by Crawford in his Book on 
Construction of Statutes, 1940 Edition, page 581, as follows :- 
“As a general rule, legislation which relates solely to procedure or 
to legal remedies will not be subject to the rule that statutes should 
not be given retroactive operation. Similarly, the presumption 
against retrospective construction is inapplicable. In other words, 
such statutes constitute an exception to the rule pertaining to 
statutes generally. Therefore, in the absence of a contrary 
legislative intention, statutes pertaining solely to procedure or legal 
remedy may affect a right of action no matter whether it came into 
existence prior to, or after the enactment of the statute. Similarly, 
they may be held applicable to proceedings pending or 
subsequently commenced. In any event, they will, at least, 
presumptively apply to accrued and pending as well as to future 
actions.” 
In this judgment, the Court also considered the question as to what were 
matters of procedure and held as under: -   
“The next question, therefore, that arises for consideration is as to 
what are matters of procedure. It is obvious that matters relating to 
the remedy, the mode of trial, the manner of taking evidence and 
forms of action are all matters relating to procedure. Crawford too 
takes the view that questions relating to jurisdiction over a cause of 
action, venue, parties pleadings and rules of evidence also pertain 
to procedure, provided the burden of proof is not shifted. Thus a 
statute purporting to transfer jurisdiction over certain causes of 
action may operate retroactively. This is what is meant by saying 
CA 778-2005 ETC 
 
56 
that a change of forum by a law is retrospective being a matter of 
procedure only. Nevertheless, it must be pointed out that if in this 
process any existing rights are affected or the giving of retroactive 
operation causes inconvenience or injustice, then the Courts will not 
even in the case of a procedural statute, favour an interpretation 
giving retrospective effect to the statute. On the other hand, if the 
new procedural statute is of such a character that its retroactive 
application will tend to promote justice without any consequential 
embarrassment or detriment to any of the parties concerned, the 
Courts would favorably incline towards giving effect to such 
procedural statutes retroactively.” 
 
45. 
 
In a subsequent judgment of this Court reported as Nabi 
Ahmed v. Home Secretary (PLD 1969 SC 599) where the case of Adnan 
Afzal (supra) was also relied upon, the issue of retrospectivity was 
examined at still greater length. It is pertinent to refer to the following 
paragraphs from the said judgment:- 
“21. In England, the basic sentiment of revulsion against injustice is 
strengthened by the jealousy of Courts to preserve their jurisdiction 
uncontaminated by extra-judicial considerations. They regard all 
considerations, whether political, administrative or even legislative, if 
they are not embodied in the law itself, as subordinate, if not entirely 
extraneous, to the judicial outlook. In the United States of America, 
emphasis on the constitutional separation of power is added. In the 
words of the American Jurisprudence, 16th Volume, page 771, Art. 
429: 
"The position has been taken, however, in some jurisdictions 
that when an action is once commenced, jurisdiction is purely 
a judicial question, and it is unconstitutional, under the 
doctrine of the separation of the powers of Government, for 
the Legislature to attempt to usurp the judicial function by 
interfering legislation to oust the jurisdiction of the Court." 
------------------------------    
22.  One more consideration which appeals to me is that law 
abiding members of society regulate their lives according to the law 
as it exists at the time of their actions, and they expect the law to be 
steadfast and reliable See Hughes and others v. Lumley and others 
((1854) 4 E & B 358). They assess and weigh the consequences 
according to the demands of existing law, including the requirements 
implicit in the existing system of law, and are entitled to feel, cheated 
if the law later lets them down by taking away or reducing their 
rights, or increasing their burdens. As pointed out by Willes, J. in 
Phillips v. Eyre (22 L T 869) at p. 876 
"Retrospective laws are no doubt prima facie of questionable 
policy, and contrary to the general principle that legislation by 
CA 778-2005 ETC 
 
57 
which the conduct of mankind is to be regulated ought, when 
introduced for the first time, to deal with future acts, and ought 
not to change the character of past transactions carried on 
upon the faith of the then existing law." 
Further: 
"Blackstone, J., 1 Com. 46, describes laws ex post facto of 
this objectionable class as those by which after an action 
indifferent in itself is committed, the Legislature then for the 
first time declares it to have been a crime, and inflicts a 
punishment upon the person who has committed it. Here it is 
impossible that the party could foresee that an action, 
innocent when it was done, should be afterwards converted to 
guilt by a subsequent law; he had, therefore, no cause to 
abstain from it, and all punishment for not abstaining must of 
consequence be cruel and unjust'." 
23. Justice Holmes of America has emphasized that law should be 
reliably ascertainable-this is important for law abiding persons, so 
that they may arrange their lives accordingly, but it is equally, if not 
more, important for wrong-doers in order to know their chances in 
law. The learned Judge has said in his address delivered in 1897 
that- 
" . . if we take the view of our friend the bad man, we shall find 
that he does not care two straws for the axioms of deductions, 
but that he does want to know what the Massachusetts or 
English Courts are likely to do in fact. I am much of his mind. 
The prophecies of what the Courts will do in fact, and nothing 
more pretentious, are what I mean by the law." 
What the Courts will do tomorrow depends a great deal on the 
answer to the question: To whom the appeal lies. This is why, to my 
mind, the Privy Council held in Colonial Sugar Co., that there was no 
difference between changing the forum of an appeal and altogether 
abolishing it. A past and closed transaction must be taken to have 
been concluded according to the law in force at that time, and the 
ultimate legal consequences of a legal duty or a legal right arising 
there from must, according to Justice Holmes, mean to the parties to 
it, "a prophecy". Civilization is in justice bound to respect that 
‘prophecy', because the need for such prophecy is a creation of a 
civilized society.   
24. People do not mind changes in law, if only the procedure is 
altered without altering the substance of the law. True, it is not easy 
to draw a line between substantive and procedural law, but the task 
is not impossible if the essential difference is kept in mind. According 
to Salmond’s Jurisprudence, 12th Edition of 1966 at page 128- 
"The law of procedure may be defined as that branch of the 
law which governs the process of litigation . . . . . All the 
residue is substantive law, and relates, not to the process of 
litigation, but to its purposes and subject-matter." 
CA 778-2005 ETC 
 
58 
Thus:  
" .. a right of appeal, a right to give evidence on one's own 
behalf, a right to interrogate the other party,' 'rules defining the 
remedy . . . . as those which define the right itself,' that part of 
criminal law which deals, not with crimes alone, but with 
punishments also, as the measure of liability and many rules 
of procedure which, in their practical operation, are wholly or 
substantially equivalent to rules of substantive law," 
and, as such must be treated as falling within the classification of 
substantive law. In this category has been included by this Court the 
change of forum- 
"If in the process any existing rights are affected or the giving 
of retroactive operation causes inconvenience or injustice." 
The rule regarding retrospectivity of statutes, as stated in Halsbury’s Laws 
of England, Vol. 36, 3rd Edition, at pp. 423 & 426 runs as under: - 
 “The general rule is that all statutes, other than those which are 
merely declaratory, or which relate only to matters of procedure or of 
evidence, are prima facie, prospective, and retrospective effect is 
not to be given to them unless, by express words or necessary 
implication, it appears that this was the intention of the Legislature.” 
 
“The presumption against retrospection does not apply to legislation 
concerned merely with matters of procedure or of evidence; on the 
contrary, provisions of that nature are to be construed as 
retrospective unless there is a clear indication that such was not the 
intention of the Parliament. 
 
“It is presumed, moreover, that procedural statutes are intended to 
be fully retrospective in their operation, that is to say, are intended to 
apply not merely to future actions in respect of existing causes, but 
equally to proceedings instituted before their commencement. Thus, 
provisions regulating, or empowering the court to regulate, the 
course of proceedings, affect proceedings pending at their 
commencement, unless an intention to the contrary is clearly 
shown.” 
 
“…. the Courts regard as retrospective any statute which operates 
on cases or facts coming into existence before its commencement.” 
 
In the instant case, the learned counsel for the parties were on common 
ground on the above exposition of the law, inasmuch as every one agreed 
that the substantive laws apply prospectively unless the statute expressly 
or implied provided that it would be applied retrospectively, the procedural 
laws are generally retrospective and apply to the pending proceedings with 
CA 778-2005 ETC 
 
59 
the rider that if they affect the existing or accrued right, they would not 
apply retrospectively, unless of course the legislature intended to do so by 
express words or necessary implication. However, the learned counsel 
were at variance on the issue whether after the repeal of the Ordinance of 
1979, the respondents had acquired any vested right, or a right had 
accrued to them on account of the repeal of the Ordinance of 1979, so as 
not to touch the assessment orders passed under the repealed Ordinance, 
particularly when section 65 of the repealed Ordinance, though stood 
saved under the original Ordinance, was not saved while introducing 
amendments in the Ordinance. In a somewhat similar context, in the case 
of Inspecting Additional Commissioner of Income Tax v. Zakaria H.A. 
Sattar Bilwani, Karachi (C.P. No. 643-K to 647 of 2007 decided on 
15.7.2008), this Court noted that section 17-B introduced in the Wealth Tax 
Act, 1963 by means of Finance Act, 1992 was enacted to initiate 
proceedings in the interest of revenue. It was held that the amendment 
brought about by insertion of section 17-B was not merely procedural but 
also conferred powers to recall cases to the extent that was not available 
earlier which, by its very nature, was substantive in nature, therefore, it did 
not operate retrospectively. In this case, the case of Commissioner of 
Income Tax v. Eastern Federal Insurance Company [(1982) 46 Tax 6 (SC. 
Pak)] was also noted wherein the amendment brought about by the 
Finance Act, 1975 extended the period for re-opening of a case from four 
to six years. It was held that the amendment would not be applicable to the 
cases in which the period of four years had already expired on the ground 
that the vested right of the party after expiry of four years could not be 
taken away and therefore the amendment was not attracted to the case of 
CA 778-2005 ETC 
 
60 
the assessee. The following portion of the judgment was quoted with 
approval: - 
“15.  Keeping these principles in view, we are of the opinion 
that, even though the amending provisions in question, were a part 
of the procedural laws, they cannot be given retrospective effect, in 
the facts of the present case. There is no dispute between the 
parties that, but for the amendments, the business profits for the 
chargeable accounting period in question, were not liable to be 
assessed on 31.1.1958. On the expiry of the period of four years 
under section 14, the assessee had, therefore, clearly acquired a 
right and the assessment for the said period became a past and 
closed transaction. This right could not, therefore, be taken away by 
giving retrospective operation to the amended statutory provisions 
extending the period for assessment. The contentions advanced on 
behalf of the appellant are without substance. We, accordingly, 
agree with the judgment under appeal.” 
 
The introduction of time-limit within which an assessment can be amended 
in both the Ordinances (section 65 of the repealed Ordinance and section 
122 of the Ordinance) is a statutory recognition of the protection against 
arbitrary power of reopening or amending an assessment after the expiry 
of the prescribed period. Therefore, it could not be said that in reopening 
the assessments already completed no right of the assessee/taxpayer was 
involved.   
46. 
 
It was contended by Mr. Mansoorul Arifin that the provisions of 
section 122 of the Ordinance relating to amendment of assessment were 
pari materia with those of section 166A of the repealed Ordinance. He 
submitted that with the promulgation of the repealed Ordinance and repeal 
of the Income Tax Act, 1922 with effect from 1.7.1979, the provision akin to 
section 66A, viz., section 34A of the Act of 1922 was not saved by section 
166 of the repealed Ordinance nor such a provision was enacted in the 
later enactment. Section 66A was inserted into the repealed Ordinance by 
the Finance Ordinance, 1980 with effect from 1.7.1980. The erstwhile 
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61 
Central Board of Revenue,5 vide Circular No. I(48)/II/1/79, dated 17.2.1981 
stated that section 66A of the repealed Ordinance had no retrospective 
application. The said provisions were considered by a learned Division 
Bench of the Lahore High Court in the case of Monnoo Industries Ltd v. 
C.I.T. (2001 PTD 1525). It was held that section 66A of the repealed 
Ordinance was not procedural in nature and, therefore, it could not have 
retrospective effect to touch the assessments completed before its 
incorporation into the statute book, particularly in view of the fact that 
revisional provisions were not saved by the savings clause contained in 
section 166 of the repealed Ordinance providing for repeal and savings of 
the late Income Tax Act, 1922. Thus, the assessments pending at the time 
of enforcement of the repealed Ordinance had to be dealt with as if the 
repealed Ordinance had not come into force and the assessments finalized 
before 1.7.1980 could not be reopened under section 66A of the repealed 
Ordinance.  It may be observed that section 66A of the repealed 
Ordinance provided for revision of the assessment orders, hence generally 
speaking it was pari materia, not with section 122 but with section 122A of 
the Ordinance, which provided for revision of the proceedings under the 
Ordinance. Subsection (5) is pari materia with section 65 of the repealed 
Ordinance inasmuch as the grounds earlier provided for additional 
assessment were made the grounds for amendment or further amendment 
under that subsection while section 66A of the repealed Ordinance qua 
grounds for revision is pari materia with subsection (5A).  In any event, the 
High Court in the above case held that section 66A of the repealed 
Ordinance was not procedural in nature and, therefore, it could not have 
                                                 
5 Renamed as Federal Board of Revenue.  
CA 778-2005 ETC 
 
62 
retrospective effect to touch the assessments completed even though it 
was not saved under section 166 of the repealed Ordinance.  
47. 
 
As put by the Privy Council in the case of Mahaliram Ramjidas 
(supra), and also reiterated by this Court in the cases of Khan Bahadur 
Amiruddin v. West Punjab Province (PLD 1956 FC 220) and Muhammad 
Amir Khan v. Controller of Estate Duty (PLD 1961 SC 119), there is a 
distinction between provisions which impose taxes and those which 
provide for the machinery by which tax is assessed and realized. The 
provisions relating to imposition of tax are to be strictly construed in favour 
of the subject so that if there be any substantial doubt, it has to be resolved 
in his favour. But the machinery sections are to be liberally construed. If 
the incidence of tax be clear, the machinery sections should be so 
construed as to make the realization of the proper tax possible. They 
should not be so construed as to defeat the intention of the legislature and 
to prevent the realization of the tax that is in fact due. However, in our 
view, the provision is impregnated with an essential attribute, which affects 
an accrued right of an assessee or a taxpayer that after efflux of a certain 
period of time, his assessment will not be opened or amended. Therefore, 
the section cannot be applied retrospectively unless the legislature has by 
express words or necessary implication intended to give it retrospective 
effect. Our burden, therefore, in the light of the contentions of the learned 
counsel for the parties is to find from the provisions of the Ordinance 
whether the legislature intended to apply provisions of section 122 
retrospectively, either by express words, or by necessary implication, and 
what treatment the Ordinance envisaged to be given to the proceedings 
pending under the repealed Ordinance, including additional assessment 
CA 778-2005 ETC 
 
63 
under section 65, which, to an extent, is pari materia, with the provisions of 
subsection (5) of section 122.   
48. 
 
The learned counsel for the appellants vehemently contended 
that there was clear distinction between the charging sections (in this case 
sections 4 to 8 of the Ordinance) and the procedural or machinery 
provisions, section 122 being one of them. While the former sections were 
to be construed strictly, liberal approach was required to be adopted in the 
interpretation of the procedural or machinery provisions, so as to make the 
machinery workable and the realization of the tax possible. On the other 
hand, the learned counsel for the respondents took the position that an 
element of addition of liability was woven into the overall provisions of the 
Ordinance, particularly into the machinery sections, including section 122, 
therefore, the same could not be given retrospective effect. Having 
anxiously considered the matter, the view we are inclined to take is that the 
provision is impregnated with the potential of adding to the liability of the 
taxpayer, therefore, the same is not a mere matter of procedure. It has 
already been held that the taxpayers/assessees have a right that their 
assessments will not be reopened after the expiry of the statutory period of 
five years.  
 
49.  
 
As to the non-incorporation into the original Ordinance of the 
concept of “additional assessment on the grounds of escapement of 
income, etc.” in the former laws, (later introduced into the Ordinance under 
subsection (5), or for that matter various other provisions of the repealed 
Ordinance, the legislature realizing the flaws in the law, immediately took 
in hand the work of filling the lacunae and supplying the omissions on 
successive reviews of the law in its present state. Thus, on the very day of 
CA 778-2005 ETC 
 
64 
the enforcement of the Ordinance, i.e. 1.7.2002, the words and figures, “or 
issued under sections 59, 59A, 62, 63 or 65 of the repealed Ordinance” 
were inserted in subsection (1) of section 122 along side many other 
amendments and the assessment orders passed under those sections 
were brought within the pale of the amendment power. Likewise, on 
insertion of subsection (5) by the Finance Act, 2003, the pari materia 
provisions of section 65 (escapement of income from assessment, etc.) 
were brought on the statute book. These omissions were, however, earlier 
curable with the unamended provision of subsection (1) of section 239 on 
the statute book, which provided that the repealed Ordinance shall 
continue to apply to the assessment year ending on the 30th day of June, 
2003, but became incurable with the substitution of that provision with 
subsections (1), (2) and (3) of section 239 by the Finance Ordinance, 2002 
and the Finance Act, 2003, which omitted the en block applicability of the 
repealed Ordinance to the relevant assessments. Had the unamended 
provision of subsection (1) of section 239 continued on the statute book, 
no difficulty would have arisen regarding the treatment of assessment 
orders passed in respect of the assessment year ending on 30th June 
2003. In such eventuality, the assessments up to the said period would 
have been governed under the repealed Ordinance, while the 
assessments of the post enforcement period of the Ordinance of 2001 
would be governed under the latter Ordinance.   
50. 
 
M/S Sirajuddin Khalid and M. Iqbal Hashmi, ASCs argued that 
the terms ‘tax’, ‘taxable income’ and ‘taxpayer’ as defined in section 2(63), 
(64) & (66) respectively were restricted to the Ordinance as they did not 
contain any reference to the corresponding or pari materia provisions in 
the repealed Ordinance, hence the provisions of the Ordinance could not 
CA 778-2005 ETC 
 
65 
be applied to the assessments completed under the repealed Ordinance. 
The relevant provisions are reproduced below: - 
“2(63) 
“Tax” means any tax imposed under Chapter II, and 
includes any penalty, fee or other charge or any sum or 
amount leviable or payable under this Ordinance.” 
 
(64)   
“Taxable income” means taxable income as defined in 
 
section 9.” 
 
(66)  
“Taxpayer” means any person who derives an amount 
 
chargeable to tax under this Ordinance and includes --.” 
 
A bare perusal of the above provisions shows that here too the draftsman 
failed to create any link between these provisions and the relevant 
provisions of the repealed Ordinance.  
51. 
 
This brings us to the question how this Court can come to the 
rescue of the draftsman who has left so much to be desired in the 
Ordinance. To find an answer, reference is made to the case of 
Muhammad Amir Khan v. Controller of Estate Duty (PLD 1961 SC 119) 
where this Court considered the question whether the Finance Act of 1956 
was not ultra vires the Central Legislature and, in any case, even if the 
Finance Act of 1956 was ignored the proper duty calculated on the basis of 
determination by the Controller could be realised in spite of the defective 
wording of section 57 as it stood before its amendment by the Finance Act 
of 1956. Another question considered in this case was whether this Court 
could modify section 57 so as to bring it in accord with the rest of the Act 
and the intention of the Legislature. The Court dealt with the above 
questions in the following manner: - 
“We are satisfied that this is a case where the Court can modify the 
language of an enactment. It will be observed that there cannot be 
the slightest doubt in the present case as to the intention of the 
Legislature. In fact, it is admitted on behalf of the appellants that the 
failure to make a consequential amendment in section 57 could only 
be due to a slip. After providing the Controller could determine value 
subject to an appeal to the Appellate Tribunal the Legislature could 
CA 778-2005 ETC 
 
66 
not possibly have intended that duty should be paid only on the 
account which was filed by the accounting party itself. All that has 
happened is that the draftsman failed to refer in section 57 to the 
provisions relating to determination in accordance with the amended 
Act. That we can modify the language of an Act to give effect to the 
manifest and undoubted intention of the legislature is a proposition 
which is well supported by authority and well justified in reason. As 
stated in Crawford on Statutory Construction (section 201 p. 348): 
"If the true meaning of the legislature appears from the entire 
enactment, errors, mistakes, omissions and misprints may be 
corrected by the Court, so that the legislative will may not be 
defeated. As a result, spelling, grammar, numbers and even 
words, may be corrected. This, as already stated, is simply 
making the strict letter of a statute yield to the obvious intent of 
the Legislators. But it must clearly, or at least with reasonable 
certainty, appear that the error is in fact one before the Court 
will be justified in making the proper correction or amendment 
or the Court will invade the province of the legislature and 
exercise legislative power. But when satisfied of the error, the 
Court may make the necessary correction. In accord with this 
principle, an erroneous description may be made to describe 
the thing actually intended or a misnomer made to name the 
thing really meant." 
In Maxwell's Interpretation of Statutes the rule is thus stated on p. 
229, 1953 Edition: 
"Where the language of the statute, in its ordinary meaning 
and 
grammatical 
constructions, 
leads 
to 
a 
manifest 
contradiction of the apparent purpose of the enactment, or to 
some inconvenience or absurdity, hardship or injustice, 
presumably not intended, a construction may be put upon it 
which modifies the meaning of the words, and even the 
structure of the sentence." 
In Salmon v. Duncombe and others (11 A C 634), their Lordships of 
the Privy Council said 
"It is, however, a very serious matter to hold that when the 
main object of a statute is clear, it shall be reduced to a nullity 
by the draftsman's unskilfulness or ignorance of law. It may be 
necessary for a Court of Justice to come to such a conclusion, 
but their Lordships hold that nothing can justify it except 
necessity or the absolute intractability of the language used. 
And they have set themselves to consider, first, whether any 
substantial doubt can be suggested as to the main object of 
the legislature, and, secondly, whether the last nine words of 
section 1 are so cogent and so limit the rest of the statute as 
to nullify its effect either entirely or in a very important 
particular." 
There being no doubt in the present case that the duty which the 
legislature intended to be realized was that which was to be 
CA 778-2005 ETC 
 
67 
determined in accordance with the provisions of the Act. We find we 
have jurisdiction to modify section 57 so as to rectify the draftsman's 
mistake and to read in it references to the Controller and the 
Appellate Tribunal, etc., and we would hold that the proper duty 
could be realized in spite of the defective wording of section 57. 
Stress was laid during argument on the rule that statutes imposing 
taxes should be strictly construed. Any effort to invoke the aid of this 
rule in the present case is misconceived. There is a distinction 
between provisions which impose taxes and those which provide for 
the machinery by which tax is assessed and realized. The provisions 
relating to imposition of tax are to be strictly construed in favour of 
the subject so that if there be any substantial doubt it has to be 
resolved in his favour. But the machinery sections are to be liberally 
construed. If the incidence of tax be clear the machinery sections 
should be so construed as to make the realization of the proper tax 
possible. They should not be so construed as to defeat the intention 
of the legislature and to prevent the realization of the tax that is in 
fact due. The distinction stated above was recognised by the 
Federal Court of Pakistan in Khan Bahadur Amiruddin and others v. 
West Punjab Province (P L D1956 FC 120), where the learned 
Judges while dealing with a case under the Punjab Immovable 
Property Tax Act said: 
"The Act in question is no doubt a Taxing Act and unless the 
liability to be taxed is clear the interpretation should be in 
favour of the subject. But no question of interpretation arises 
regarding section 3, which, in unambiguous terms, determines 
the liability of the lands to be taxed. The provisions that have 
to be interpreted are those relating to the machinery of the 
assessment and in respect of such provisions of a taxing Act 
the Privy Council in Income-tax Commissioner v. Mahabi 
Ramjidas AIR 1940 P C 124, observed that that construction 
should be preferred which makes the machinery workable." 
We also agree with the contention of the learned Attorney-General 
that in spite of the defective wording of section 57 duty could be 
realized on account of section 58-D. This section empowers the 
Controller to issue a notice of demand when duty has been 
determined in consequence or in pursuance of an order passed 
under the Act. In accordance with this section therefore once the 
Controller determines the value of the property and the duty that is 
due, he would have authority to issue a notice of demand. It has 
been urged on behalf of the appellants that this empowers only the 
issue of notice and does not contain any specific provision as to the 
realization of the duty. It appears to us to be involved in the authority 
to issue notice that the amount mentioned in the notice can be 
realized. 
We may mention before concluding the contention pressed before 
us by Mr. Suhrawardy that the Controller and the Government were 
only taking advantage of a technicality inasmuch as the High Court 
may very well have allowed Writ Petition No. 39/55 and may have 
granted a writ forbidding the Controller from taking further steps. We 
CA 778-2005 ETC 
 
68 
may point out that it is only the appellants who have been trying to 
take advantage of a technicality and they have failed. The liability of 
payment of estate duty arose in the year 1952 when Sir Muhammad 
Akbar Khan died and in accordance with the Estate Duty Act the 
value of the estate of Sir Muhammad Akbar Khan was to be 
assessed by the Controller. The amendment of 1953 had come into 
force before the year allowed to the Central Board of Revenue for 
reference to the High Court expired. The Controller admittedly had 
on account of the amendment the power to determine value. The 
appellants had objected to the exercise of jurisdiction on the ground 
of a drafting error. This objection though conceded in a limited form 
by the Advocate-General of Pakistan in 1955 had no force and is 
now being overruled. The effect of the judgment is that proceedings 
before the Controller shall have their ordinary and natural course.”   
 
Thus, in the course of interpretation of statutes, this Court while 
ascertaining the manifest, undoubted and true will and intent of the 
legislation, is fully competent and empowered not only to fill the lacuna or 
supply the omissions, but also to point to the deficiencies or the excesses 
that have crept into the legislation due to the unskilfulness of the draftsman 
against the legislative will.  
52. 
 
In the instant appeals, as noted earlier, leave to appeal was 
granted to examine the scope, effect and validity of section 122. The 
learned counsel for the respondents had to devote considerable time in 
arguing excessive and repetitive power to amend vested in the 
Commissioner at the cost of arbitrariness. The learned counsel vehemently 
contended that arbitrary powers were given to the Commissioner to amend 
an assessment and the draftsman failed to properly depict the legislative 
intent in this regard, which was to confer the power of amendment of 
assessment on the Commissioner simpliciter. Though, in response the 
learned counsel for the appellants contended that subsection (1) of section 
122 was an enabling provision and the power of amendment was to be 
exercised subject to the constraints and restrictions imposed on it in the 
remaining parts of the section, but the fact remains that the power presents 
CA 778-2005 ETC 
 
69 
a draconian façade to a taxpayer. To begin with, subsection (1) invests the 
Commissioner with the power to amend an assessment order by making 
such alterations or additions as he considers necessary. Next, subsection 
(3) says that the Commissioner shall be treated as having made an 
amended assessment of the taxable income and tax payable thereon as 
set out in the revised return furnished by a taxpayer in terms of subsection 
(6) of section 114. Under subsection (4), where an assessment order has 
been amended under subsection (1) or (3), the Commissioner may further 
amend it as many times as may be necessary over a period of five 
years after the issuance of the assessment order, or a period of one year 
after the issuance of amended assessment order. Ambiguity abounds in 
the subsection. Under this subsection, the Commissioner may further 
amend an assessment 100 times or 1000 times within the five years time-
limit. The order passed under subsection (1) will be an amended 
assessment order. The revised return filed under subsection (3) shall also 
be treated as an amended assessment. One is left wondering from which 
assessment order the period of five years, or one year will be computed, 
from the date of the revised return, which in itself is an amended 
assessment order under subsection (3)(a), or an order amending 
assessment for the first time, or the hundredth time under subsection (4). 
Subsection (4A) is another patch work done for the limited purpose of 
saving the time-limit prescribed in section 65 of the repealed Ordinance for 
dealing with the assessments made under that provision. Again, this would 
not have been required had the unamended provision of section 239(1) of 
the Ordinance continued on the statute book. No doubt, subsection (5) 
stipulates the conditions under which the power to amend an assessment 
is to be exercised, but its placement in the section suggests, though 
CA 778-2005 ETC 
 
70 
incorrectly, as if it is an independent power of amendment. If the grounds 
for amendment or further amendment were provided in subsection (1) 
itself, or the same were suffixed immediately after it, it would be easily 
comprehended. The absurdity, inconvenience and hardship are manifest. 
Then is subsection (5A), which provides that the Commissioner may 
amend, or further amend an assessment order, if he considers that the 
assessment order is erroneous in so far it is prejudicial to the interest of 
revenue. Indeed, it is an independent power, apart from the power of 
amendment contained in subsections (1), (3) & (4). That is why, the 
draftsman provided in subsection (5B) the time-limit within which this 
power was to be exercised. In this subsection, separate reference to 
subsection (9) – affording of opportunity of hearing to the taxpayer, is 
made. From the language of subsection (9), the provision appears to be 
applicable to the section as a whole and would be attracted to innumerable 
amendments or further amendments of assessments envisaged therein. 
The reference does not depict the legislative intent.   
53. 
 
It was conceded by the learned counsel for the appellants that 
subsection (5A) provided an independent power of amendment or further 
amendment of assessment. Mr. M. Ilyas Khan stated that the power under 
subsection (5) was original in nature while that under subsection (5A) was 
revisional in nature. In fact, the grounds for amendment or further 
amendment provided in this subsection were the grounds for revision 
under section 66A of the repealed Ordinance. Now, the assessment orders 
are subject to a double revision. One is by the Commissioner under 
section 122A where no specific ground for revision is provided, but is to be 
made on an inquiry conducted in the matter. The other is by the Regional 
Commissioner under section 122B in a matter relating to issuance of an 
CA 778-2005 ETC 
 
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exemption or lower rate certificate with regard to collection or deduction of 
tax at source under the Ordinance. Here too, an impression of excessive 
powers surfaces. Then, the Ordinance provides in section 221 for 
rectification of mistakes, inter alia, by the Commissioner. Subsection (1A) 
specifically empowers the Commissioner to amend any order passed 
under the repealed Ordinance by the Deputy Commissioner, etc. There is 
a need to review the language, content and scope of the power to amend 
and further amend an assessment, the power to revise an assessment and 
the power to rectify mistakes envisaged in these sections so as to make it 
in line with the legislative intent of consolidating the law relating to income 
tax so as to make it easily comprehensible to the convenience of the 
taxpayers.  
54. 
 
A perusal of section 65 of the repealed Ordinance shows that 
a period of five years was provided for issuing notice to an assessee to 
initiate proceedings for additional assessment in the cases of escapement 
of income from assessment, etc. Time-limit of five years, with certain 
changes is also envisaged under subsections (2) & (4) of section 122 of 
the Ordinance within which power to amend an assessment may be 
exercised. Keeping the former and the present states of law in view, the 
irresistible conclusion appears to be that the assessments completed 
under the repealed Ordinance ought to be governed by the old law while 
the assessments of the post-enforcement period of the Ordinance are to 
be governed by the new law. This treatment of the two sets of 
assessments would also avert the anomaly that would be created if the 
assessments of the period up to 30th June, 2003 were excluded from the 
operation of the previous law on account of its repeal, and not included in 
the new law on account of its being prospective in application. It appears 
CA 778-2005 ETC 
 
72 
that the respondents have been trying to take advantage of the 
technicalities, but we are afraid, they must fail. If their cases do not fall 
within the ambit of provisions of section 122 on account of the same being 
prospective, they cannot exclude their assessments from the purview of 
section 65 of the repealed Ordinance merely because of the lapse of the 
draftsman who omitted subsection (1) of section 239 at the amendment 
stage. Had the provisions of subsection (1) of section 239 of the Ordinance 
continued on the statute book, there would have been no ambiguity and no 
difficulty at all. In that eventuality, the assessments up to the period ending 
on 30th June 2002 would be governed by the relevant provisions of the 
repealed Ordinance as if the Ordinance had not come into force.  
55. 
 
At this stage, we may take up another contention of the 
learned counsel for the appellants that in some of the cases, the writ 
petitions were filed in the High Court against the issuance of show cause 
notices by the taxation officers though appropriate remedies were available 
to them under the law in the form of appeal/revision before the concerned 
Income Tax authorities. It was contended that instead of availing the 
aforesaid remedies, the assessees/taxpayers directly filed the writ petitions 
and the High Courts also incorrectly entertained the same, though the 
same were not maintainable. On the other hand, the learned counsel for 
the respondents submitted that the writ petitions were filed against the 
issuance of show cause notices on the ground of lack of authority and 
jurisdiction in the Income Tax authorities under the Ordinance. It was also 
submitted that the contention of the learned counsel for the appellants was 
of no significance particularly when the High Courts in a large number of 
tax references also reached the same conclusion that the provisions of 
CA 778-2005 ETC 
 
73 
section 122 of the Ordinance were prospective in operation and the 
relevant assessments could not be reopened under those provisions.  
56. 
 
In Commissioner of Income Tax v. Hamdard Dawakhana 
(Waqf) (PLD 1992 SC 847) this Court quoted with approval the observation 
in an earlier case6 that the tendency to bypass the remedy provided in the 
relevant statute and to press into service constitutional jurisdiction of the 
High Court was to be discouraged, though in certain cases invoking of 
such jurisdiction instead of availing the statutory remedy was justified, e.g. 
when the impugned order/action was palpably without jurisdiction and/or 
mala fide. It was further held that to force an aggrieved person in such a 
case to approach the forum provided under the relevant statute may not be 
just and proper. In the said case, the appellant had opted to avail of the 
hierarchy of the forums provided for under the repealed Ordinance up to 
the stage of filing of appeal before the Tribunal, but then instead of making 
a reference to the High Court, filed a Constitution Petition in the High 
Court. It was observed that once a party opted to invoke the remedies 
provided for under the relevant statute, he could not at his sweet will switch 
over to constitutional jurisdiction of the High Court in the mid of the 
proceedings in the absence of any compelling and justifiable reason. 
Incidentally, that is not the position in the instant cases where some of the 
respondents directly filed writ petitions in the High Courts and challenged 
the competence and validity of the show cause notices issued to them. 
Here, the ratio of the judgment of this Court in Murree Brewery Co. Ltd v. 
Pakistan (PLD 1972 SC 279) is more pertinently attracted. In this case, the 
appellant challenged the very jurisdiction of the Capital Development 
Authority acting under the Capital Development Authority Ordinance, 1960 
                                                 
6 C.A. No. 79-K of 1991 
CA 778-2005 ETC 
 
74 
to make the impugned acquisition under the Ordinance. It was held that if 
the appellant succeeded in establishing that the impugned acquisition was 
ultra vires the Ordinance, its appeal under section 36 would be an exercise 
in futility. It was further held that the rule that the High Court would not 
entertain a writ petition when other appropriate remedy was yet available 
was not a rule of law barring jurisdiction, but a rule by which the Court 
regulated its jurisdiction. It was noted that one of the well recognized 
exceptions to the general rule was a case where an order was attacked on 
the ground that it was wholly without authority. Where a statutory 
functionary acted mala fide or in a partial, unjust and oppressive manner, 
the High Court in the exercise of its writ jurisdiction had power to grant 
relief to the aggrieved party. It was also observed that the appeal under 
section 36 was limited to a matter which was within the jurisdiction of the 
authority concerned and the scope of the Ordinance. It was concluded that 
the question of jurisdiction was a matter for review, which was based not 
on the merits but on the legality of the lower authority’s proceedings. In the 
instant cases too, the jurisdiction of the Income Tax authorities to issue the 
impugned show cause notices was successfully brought under challenge 
before the High Courts and it was found that the notices were not 
competently issued in view of the prospective application of the provisions 
of section 122 of the Ordinance. The case of Pak Arab Fertilizers (Pvt.) Ltd 
relied upon by Mr. M. Ilyas Khan was not relevant, as no factual 
controversies were involved in the writ petitions filed by the respondents in 
these matters. The objection of the learned counsel, in the light of the 
above well-settled law, is overruled.    
57. 
 
In the light of the above discussion, we uphold view of the 
Sindh High Court taken in Honda Shahra-e-Faisal and followed by the 
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75 
other High Courts as also the Income Tax authorities that the provisions of 
section 122 of the Ordinance are prospective in their application and do 
not apply to the assessment of a year ending on or before 30th June, 2002. 
On that account the appeals are bound to fail and the impugned judgments 
would be upheld. However, the learned High Courts have not adverted to 
the question of treatment of assessments of the period preceding the 
enforcement of the Ordinance. As already noted, section 65 of the 
repealed Ordinance provided a period of five years for additional 
assessment and such assessments were to be dealt with under the said 
provision in accordance with original section 239(1) of the Ordinance. The 
learned High Courts failed to take into consideration this aspect of the 
matter and did not direct that the assessments completed under the 
repealed Ordinance would be subject to the provisions of the said 
Ordinance, as originally provided in unamended section 239(1), but not 
clearly and properly provided in the Ordinance at the amendment stage. 
We fill this lacuna in the impugned judgments and direct that the 
assessment of any year ending on or before 30th June, 2002 would be 
governed by the repealed Ordinance and shall be dealt with as if the 
Ordinance had not come into force. In taking this view, we are fortified by a 
passage from the Maxwell on Interpretation of Statutes, 10th Edition (1953), 
p. 228, which reads as under: - 
 
“Where rights and procedure are dealt with together, the 
intention of the legislature may well be that the old rights are to be 
determined by the old procedure, and that only the new rights under 
the substituted section are to be dealt with by the new procedure.” 
 
58. 
 
Mr. Shahid Jameel Khan, learned counsel for the appellants in 
C.A. No. 44 to 49 of 2009 stated that the issue for adjudication in these 
appeals before the High Court related to section 12(18) of the Ordinance in 
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respect of assessment years 1999-2000 to 2002-2003, which was not 
touched upon by the learned Judges in the impugned judgments. He, 
therefore, submitted that the proceedings, which were the subject-matter of 
the said appeals were required to be remanded to the High Court for 
decision in accordance with law. He further submitted that the 
assessments relating to 1994-1995 and 1999-2000 were to be governed 
under section 122 of the Ordinance. Therefore, to that extent, the appeals 
would be dealt with in the light of the decision of this Court in other 
appeals.   
59. 
 
As to Civil Appeals No. 50 & 51 of 2009, Mr. Shahid Jameel 
Khan, learned counsel for the appellants stated that the issue for 
adjudication before the High Court related to section 221 of the Ordinance, 
i.e. rectification of assessments of the year 1998-1999, but the same was 
not touched upon by the learned Judges in the impugned judgments. 
Likewise, in respect of assessments 2000-2001, 2001-2002 and 2002-
2003 the issue for adjudication before the High Court related to 
disallowance of interest expense, which too was not touched upon by the 
learned Judges in the impugned judgments. Only one assessment year, 
i.e. 1998-1999 related to section 122. He, therefore, submitted that the 
appeals to the extent of section 221 and disallowance of interest expense 
may be remanded to the learned High Court for decision according to law.   
60. 
 
There is force in the submissions of the learned counsel. 
Accordingly, the appeals are partly allowed and the impugned judgments 
set aside to the above extent. The proceedings are remanded to the 
learned High Court for decision in accordance with law. As to section 122, 
the appeals will follow the decision of this Court in other appeals.  
CA 778-2005 ETC 
 
77 
61. 
 
The learned counsel next submitted that C.A. No. 1099 to 
1101 of 2008 were inadvertently clubbed in the High Court with section 
122 cases, though these appeals related to rectification of assessment 
orders under section 221 of the Ordinance. We have examined the case 
files and have gone through the grounds of PTR No. 9, 10 & 11 of 2008 
filed before the High Court. The assessments in these cases were 
rectified under section 221 and refunds of different sums of money were 
created. Subsequently, the assessments were reopened under section 
122(5A) on the ground of being erroneous and prejudicial to the interest 
of revenue. The order was upheld in appeal before the Commissioner. 
However, the Appellate Tribunal allowed the appeal of the assessee. 
Consequently, the statements filed by her under sections 115(4) and 
143B in respect of assessment year 2002-2003 were accepted and the 
rectification made under section 221 was revived. The precise 
contention of the learned counsel for the appellant was that the learned 
High Court decided these cases along with the connected cases on the 
issue of prospectivity or retrospectivity of section 122, and did not go 
into the actual controversy raised in these cases, i.e. the rectification of 
the relevant assessments, therefore, the appeals were required to be 
remanded to the High Court for decision in accordance with law. We 
uphold the contention of the learned counsel. Thus, the appeals are 
partly allowed and the cases remanded to the learned High Court for 
decision in accordance with law. Obviously, if any question pertaining to 
the application of section 122 be raised, the same would be governed 
by this judgment.  
CA 778-2005 ETC 
 
78 
62. 
 
Mr. M. Ilyas Khan, Sr. ASC, learned counsel for the 
appellants in C.A. No.826 & 1102 of 2008 submitted that these appeals 
may be delinked as a different question of law was involved in it. Mr. 
Sirajuddin Khalid, ASC, learned counsel for the respondent in C.A. 
No.826/2008 subscribed to the submission of the learned counsel for 
the appellant. Order accordingly. 
63. 
 
Mr. Shahid Jameel Khan, ASC further submitted that C.A. 
No.113/2009 was required to be delinked as a different question of law 
was involved therein. We have examined the case file and have found 
that the said appeal involves the common question of law relating to 
prospectivity or retrospectivity of section 122 of the Ordinance. 
Therefore, the same cannot be delinked and will be governed by this 
judgment.     
64. 
 
In the result, the titled appeals and petitions will be 
governed by the following orders: -  
(1) 
Civil Appeals No. 1617, 1622-1624, 2673 & 2675-2678 of 
2006, and Civil Appeals No. 497, 498, 911, 916, 1002, 
1003, & 2282–2292 of 2008 are dismissed as withdrawn 
with the observation that the assessment of any income 
year ending on or before 30th June 2002 shall be governed 
by the repealed Ordinance as if the Ordinance had not 
come into force as held in Para 54 above.   
(2) 
Civil Appeals No. 1099 to 1101 of 2008 and Civil Appeals 
No. 44 to 51 of 2009 are partly allowed, the judgments of 
the High Court are set aside and the matters remanded to 
the concerned High Court for decision according to law.  
(3) 
Civil Appeals No. 826 & 1102 of 2008 are delinked and 
adjourned to a date in office.   
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79 
(4) 
All the remaining civil appeals and civil petitions are 
dismissed with no order as to costs.  
 
 
 
 
 
 
 
 
 
   CHIEF JUSTICE 
 
 
 
 
 
 
 
 
 
JUDGE 
 
 
 
 
 
 
 
 
 
JUDGE 
Islamabad 
Announced on ___________. 
 
 
 
 
 
 
CHIEF JUSTICE 
 
 
APPROVED FOR REPORTING  
