Islamabad: The Supreme Court has ruled that a subsequent bench comprising the same number of judges is bound by the judgment of an earlier co-equal bench and cannot issue a conflicting ruling on the same legal point. If it disagrees with the earlier judgment. the matter must be referred to a larger bench through the Chief Justice.
A five-member larger bench. in a detailed judgment authored by Justice Aqeel Ahmed Abbasi. held that adherence to judicial precedent was essential for legal certainty. consistency and institutional integrity.
The court said a previous judgment of a co-equal bench was binding not only on benches of lesser strength but also on subsequent benches of equal strength. If a subsequent bench believed that an earlier judgment contained an error or that changed legal circumstances warranted its reconsideration. it could not overrule it on its own. The matter had to be placed before a larger bench.
The Supreme Court observed that Article 189 of the Constitution made the legal principles laid down by the Supreme Court binding on all courts in Pakistan. It added that adherence to earlier judgments of co-equal benches was also a fundamental requirement of judicial discipline.
The ruling came in a tax matter involving conflicting judgments concerning the applicability of the Income Tax Ordinance. 2001 to assessments completed under the repealed Income Tax Ordinance. 1979.
The court held that the principle laid down in the 2009 judgment in Commissioner Inland Revenue v. M/s Eli Lilly Pakistan (Private) Limited was correct. while the contrary view adopted by an equal-strength bench in the 2016 case of Commissioner Income Tax. Peshawar v. M/s Islamic Investment Bank Limited was inconsistent with the doctrine of judicial precedent.
The court set aside the conflicting Islamic Investment Bank judgment and restored the legal position established in the Eli Lilly case.
According to the judgment. the Eli Lilly case had held that assessments completed under the 1979 Ordinance could only be dealt with under that law and that provisions of the 2001 Ordinance. including Section 122(5A). could not be applied retrospectively to completed assessments.
The case arose from tax proceedings concerning a taxpayer in Rawalpindi who had purchased property for Rs300. 000 in 1999. The Inland Revenue authorities treated the amount as income after the taxpayer allegedly failed to respond to notices regarding the source of investment and imposed a penalty.
The Commissioner (Appeals). Income Tax Appellate Tribunal and Lahore High Court. Rawalpindi Bench. did not uphold the department’s position. prompting it to approach the Supreme Court.
The five-member bench held that any departure from a previous judgment of a co-equal bench must necessarily be made through a larger bench.
