Law: Income Tax Ordinance, 2001

Section: 221,120,12(5A),Second.Sched.

[Income Tax Ordinance (XLIX of 2001)].....Sections 221, 120, 12(5A) & Second. Sched., Part-III, Cl.(2)---Finance Act (III of 2006), Preamble---Rectification of mistake---Tax years, 2006 and 2007---Tax rebate---Assessing Officer observed the 75% tax rebate had wrongly been claimed by the taxpayer as the rebate was only allowable on salary income and not on other income---Validity---Amendment made in Cl.(2) of Part-III of Second Schedule through Finance Act, 2006 substituting the clause restricting reduction of 75% to tax payable on' salary income only, had no retrospective application---Factually there was no mistake in the deemed order which could be rectified---First Appellate Authority had rightly annulled the amended order passed under S.21 of the Income Tax Ordinance, 2001---Appeal filed by the department was dismissed being devoid of merit. ORDER This appeal filed at the instance of the department has assailed the order of learned CIT(A), dated 17-12-2007 on the following grounds:-- "CIT(A) has erred in annulling the order under section 221 ignoring that mistake was apparent on record and full time teacher rebate was admissible only against the salary source of income. CIT (A) has erred in annulling the 221 order ignoring that allowance of correct amount of rebate was not a domain of section 122 of Income Tax Ordinance, 2001. The annulment of 221 order by CIT(A) is not admissible under law as the mistake was apparent on record and 221 order was in accordance with law." 2. Facts of the case in brief are that taxpayer an individual engaged in the profession of Medical Sciences filed return declaring taxable income at Rs.5,19,832 and claimed tax rebate @ 75% as full time teacher. This return had become a deemed order in terms of section 120 of the Income Tax Ordinance, 2001. Later on, the Assessing Officer observed that the 75% tax rebate had wrongly been claimed by the taxpayer. According to him, the rebate was only allowable on salary income and not on the other income. Thus, a show-cause notice was issued and since reply was tendered on behalf of the taxpayer order under, section 221 was passed on 27-8-2007. 3. This action of the Assessing Officer was…

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