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HIGH COURT OF AZAD JAMMU AND KASHMIR

Writ petition No. 1391/2016,

Date of Institution. 22.04.2016,
Date of Decision. 27.09.2022

Azad Jammu and Kashmir Technical Education and Vocational

Training Authority (TEVTA) of Azad Jammu and Kashmir
Government through its Chairman and Chief Operating Officer
/Secretary AJK TEVTA, House No. B-32 Upper Chatter
Muzaffarabad.

…Petitioner.

VERSUS
1. Commissioner Inland Revenue Azad Jammu and Kashmir Camp
Office Mirpur;
2. Deputy Commissioner Inland Revenue Circle-10 Professional
Muzaffarabad.
…..Non-petitioners

WRIT PETITION

Before:- Justice Sadaqat Hussain Raja, CJ.

Justice Khalid Rasheed Chaudhary, J.

PRESENT:
Raja Mohammad Hanif Khan, Advocate for the petitioner.
Sardar M. R Khan, Advocate for the respondents.

JUDGMENT:

(Justice Sadaqat Hussain Raja, Chief Justice) Through the

captioned writ petition filed under Article 44 of the Azad Jammu

and Kashmir Interim Constitution 1974, whereby a prayer has

been made by the petitioner.

It is therefore, most respectfully submitted

that the Provisional Assessment Order for the
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Tax year 2010 (Annexure PA/01)

communicated vide letter No. DCIR/C-
10/6747/2015 dated 27.06.2015 (Annexure
PA) passed by Deputy Commissioner Inland
Revenue Circle-10 (Professional) Muzaffarabad
and Order No. CIR-189/3728-29/2016 dated
09.03.2016 (Annexure PC) passed by
Commissioner Inland Revenue Azad Jammu
and Kashmir, may kindly be declared illegal,
coram non judice without lawful authority and
it may kindly be declared that the respondents
did not have an authority to assess the
petitioner for Income Tax under the Provision
of Income Tax Ordinance 2001 as applicable in
Azad Jammu and Kashmir. Any other relief
admissible under law may also be granted.
Facts of the case are that Azad Jammu and Kashmir

Technical Education and Vocational Training Authority (TEVTA)

was established through an Act of the Assembly No. III of 2007.

It is stated that in view of Section 3 ibid, the function assigned to

AJK TEVTA through Act III of 2007 are enumerated in Section 3.

It is contended that the functions assigned to AJK TEVTA does

not indulge in any business wherefrom any income is derived

and AJK TEVTA neither sells or purchase any item which shall

become the subject matter of income. It is further contended

that the AJK TEVTA does receive any income as defined in

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Section 2(29) of Income Tax Ordinance 2001 as adopted in Azad

Jammu and Kashmir. It is submitted that the proviso appended

to Section 3(2) of AJK TEVTA Act would show that even any

immovable property acquired by AJK TEVTA shall not be sold

without prior approval of the Government. It is further

submitted that according to Section 3(4) of AJK TEVTA, the

authority i.e. AJK TEVTA did not have the Board of Directors in

similar manner which is the requirement of a Company

incorporated under the Companies Ordinance as applicable in

Azad Jammu and Kashmir and in this view of the matter the AJK

TEVTA does not fall within the definition of a Company. It is

alleged that the respondents served with a notice to AJK TEVTA

under Section 176 of Income Tax Ordinance which was replied

accordingly on 10.10.2014. The respondents served another

notice under Section 176 of Income Tax Ordinance on

17.11.2014 which was replied. It is further alleged that the

respondents served another notice under Section 165 of Income

Tax Ordinance dated 15.04.2015 which was also replied on

05.05.2015. The petitioner has prayed for setting aside the

Provisional Assessment Order for the tax year 2010 passed by

Deputy Commissioner Inland Revenue Circle 10 and Order dated

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09.03.2016 passed by Commissioner Inland Revenue Azad

Jammu and Kashmir.

In earlier round of litigation, the writ petition was

dismissed by this Court vide order dated 23.01.2019. The

petitioner filed an appeal before Hon’ble Supreme Court and the

Hon’ble Supreme Court of Azad Jammu and Kashmir while

admitting the writ petition remanded the case for disposal on

merits after hearing the parties in accordance with rules and

law. Respondents have filed written statement wherein it is

stated that the petitioner has no locus standi to file the

extraordinary constitutional jurisdiction of High Court as he does

not fall in the definition of aggrieved person. It is submitted that

the writ petition is pre-mature and the petitioner has an

alternate remedy but he failed to avail the same. It is further

submitted that AJK TEVTA was established as corporate body

through Assembly Act (III) of 2007 dated 17.02.2007. It is alleged

that various notices were issued to the AJK TEVTA but the

petitioners failed to file return. It is alleged that against

Provisional Assessment Order dated 27.06.2015 the appellant

filed revision under Section 122-A of Income Tax Ordinance 2001

before Commissioner Inland Revenue. The revision petition was

dismissed by the Commissioner appeal. It is contended that

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revision lies against final Assessment Order whereas the

appellant had filed revision against Provisional Assessment

Order which was not competent. The respondents have prayed

for dismissal of writ petition.

We have heard the learned counsel for the parties

and gone through the record of case.

A perusal of record shows that the petitioner/Azad

Jammu and Kashmir Technical Education and Vocational Training

Authority (TEVTA) has filed the instant writ petition before this

Court on 22.04.2016 against the Provisional Assessment Order

for the tax year 2010 passed by Deputy Commissioner Inland

Revenue Circle 10 (Professional) Muzaffarabad and order passed

by Commissioner Inland Revenue AJ&K dated 09.03.2016. A

Division Bench of this Court dismissed the writ petition in limine

vide order dated 23.01.2019. The petitioner (TEVTA) filed an

appeal before the Hon’ble Supreme Court. The Hon’ble Supreme

Court has admitted the writ petition for regular hearing and

remanded the case to this Court for disposal on merits after

hearing the parties in accordance with rules any law.

The nucleus of the controversy for determination

according to the judgment of the Apex Court is interpretation of

Section 127 of Income Tax Ordinance 2001 in the light of the

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facts of the case in hand. In order to resolve this controversy, we

deem it proper to constitute the following points.

i. Whether the impugned proceedings are according to

law?

ii. What is the Scope of Section 127 of Income Tax

Ordinance 2001?

The petitioner claims that the respondents did not

serve any notice upon him under Section 114(4) of Income Tax

Ordinance, 2001. To resolve this question we have to discuss the

facts of case in light of relevant law. According to Section 114(4)

of Income Tax Ordinance 2001, the Commissioner may issue

notice in writing, require any person who in the Commissioner’s

opinion is required to file a return of income failed to furnish a

return of income for that year within 30 days from the date of

service of notice as the Commissioner may allow. The relevant

Section 114(4) is reproduced as under:

(4) Subject to sub-section (5), the

Commissioner may, by notice in writing,
require any person who, in the
Commissioner’s opinion, is required to
file a return of income under this Section
for a tax year [or assessment year] but
who has failed to do so to furnish a
return of income for that year within
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thirty days from the date of service of

such notice or such longer [or shorter]
period as may be specified in such notice
or as the Commissioner may allow.

A perusal of aforesaid reproduced provision of law

clearly reveals that the Commissioner may by notice in writing

require any person who in Commissioner’s opinion is required to

file a return of income but who has failed to do the same may

issue notice to him. A perusal of record shows that no notice

upon the petitioner under Section 114(4) has been served. The

learned counsel for the respondents was inquired about the

notice under Section 114(4), he admitted that notice under

Section 114(4) is not available on record.

The learned counsel for the petitioner argued that

after issuance and service of notice under Sections 114(4), the

proceedings under Section 122(C) may be initiated. We have

perused the Section 122(C) of Income Tax Ordinance 2001, a

perusal of which reveals that Section 122(C) is omitted by the

Finance Act 2017, however, the instant writ petition was filed on

22.04.2016 and at that time Section 122 (C) was in existence. It

may be stated here that according to Section 122 (C), a person

fails to furnish return of income for any tax year, the

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Commissioner may make a provisional assessment of the taxable

income. The relevant Section is reproduced as under:

122 C. Provisional Assessment:- (1)

where in response to a notice under Sub
Section (3) or Sub Section (4) of Section
114 a person fails to furnish return of
income for any tax year, the
Commissioner may, based on any
available information or material and to
the best of his judgment, make a
provision assessment of the taxable
income or income of the person and
issue a provisional assessment order
specifying the taxable income or income
assed and the tax due thereon.
(2). Notwithstanding anything contained
in this Ordinance, the provisional
assessment order completed under sub
section (1) shall be treated as the final
assessment order after the expiry of
[forty five] days from the date of service
of order of provisional assessment and
provision of this ordinance shall apply
accordingly.
A bare reading of above reproduced Section

makes it crystal clear that before initiating proceedings under

Section 122 of Income Tax Ordinance 2001, proceedings for

issuance of notice under Section 114 (4) would have been

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initiated. A Provisional Assessment under Section 122 (C) has to

be made after issuance of notice under Section 114 (4). The

learned counsel for the respondents was when confronted, he

frankly conceded that the respondents did not issue notice

under section 114(4), therefore, respondents failed to comply

with the provision of law, hence, the proceedings are against the

law.

The next point is what is the scope of Section 127 of

Income Tax Ordinance 2001? For convenient Section 127 of

Income Tax Ordinance 2001, is reproduced as under:

127. Appeals to Commissioner (Appeals): Any

person dissatisfied with any order passed by a
Commissioner or a [Office of Inland Revenue] under
Sections 121, 122, 143, 144, 162, 170, 182, or 205, or
an order under Sub-Section (I) of Section 161 holding
a person to be personally liable to pay an amount of
tax, or an order under clause (f) of sub section (3) of
Section 172, [declaring] a person to be the
representative of a non-resident person [or an order
giving effect to any finding or directions in any order
made under this Part by the Commissioner (Appeals)
Appellate Tribunal High Court or Supreme Court, or
an order under Section 221 refusing to rectify the
mistake, either in full or in party, as claimed by the
taxpayer or an order having the effect of enhancing
the assessment or reducing a refund or otherwise
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increasing the liability of the person except an

assessment order under section 122(C) may prefer
an appeal to the Commissioner (Appeals) against the
order.
(2) No appeal under Sub Section (1) shall be made
by a taxpayer against an order of assessment
unless the taxpayer has paid:-
(a) The amount of tax due under Sub section
(1) of Section 137, and
(b) No appeal under Sub Section (1) shall be
made by a taxpayer [against] an order of
assessment unless the taxpayer has paid
the amount of tax due under sub section
(1) of Section 137.
(3) ………………………………………………………………….
(4) ………………………………………………………………….
(5) ……………………………………………………………………….
Although, in Section 127 words “except an

assessment order under section 122 (C)” have been omitted by

the Finance Act 2017, however, the writ petition was filed on

22.04.2016 prior omission of these words.

Chapter III of the Ordinance deals with appeal and

Section 127 clearly ousts the jurisdiction of Appellate forum

against any order passed under Section 122 (C). Hence, there is

no alternate, adequate, efficacious remedy except to invoke

constitutional jurisdiction.
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The net shell of the above discussion is that the writ

petition is accepted and whole proceedings conducted by the

respondents are against the law and procedure therefore, the,

Provisional Assessment Order for the tax year 2010 dated

27.06.2015 passed by Deputy Commissioner Inland Revenue

Circle-10 (Professional) Muzaffarabad and order dated

09.03.2016 passed by Commissioner Inland Revenue are hereby

set aside.

Muzaffarabad, -Sd- -Sd-

27.09.2022 CHIEF JUSTICE JUDGE