I.TAS. NOS.88 AND 89/LB OF 1991-92, DECIDED ON 22ND SEPTEMBER, 1994. VS I.TAS. NOS.88 AND 89/LB OF 1991-92, DECIDED ON 22ND SEPTEMBER, 1994.
1995 PTD (Trib.) 1100
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman
I.TAs. Nos.88 and 89/LB of 1991-92, decided on 22/09/1994.
(a) Income Tax Ordinance (XXXI of 1979)---
----S. 65---Additional assessment---If no notice under S.65, Income Tax Ordinance, 1979 is issued or if the notice as issued is shown to be invalid or the notice is not properly served on an assessee the validity of the proceedings taken by the Income Tax Officer without a notice or in pursuance of an invalid notice would be illegal and void.
The service of requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under section 65 and if a valid notice is not issued as required or .it is not served validly and properly, the proceedings taken by the I.T.O. in pursuance of such invalid notice and consequent orders of re-assessment passed by the I.T.O. would be void and inoperative. The notice prescribed under section 65 cannot be regarded as a mere procedural requirement as the exercise of jurisdiction by the I.T.O. is dependent on the proper service of notice on the assessee. Thus, if no notice is issued or if the notice as issued is shown to be invalid or the notice is not properly served on an assessee then the validity of the proceedings taken by the I.T.O. without a notice or in pursuance of an invalid notice would be illegal and void.
Where for initiating any action service of notice is a precondition and such notice is without jurisdiction, all the proceedings and actions taken in pursuance thereof will be without jurisdiction.
Bhambore Ceramics Industries v. ITO, Circle F-3, South Zone, Karachi C.P. No.'447 of 1988 ref.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss. 65 & 154(6)---Additional assessment---Service of notice---Provisions of S.154(6), Income Tax Ordinance, 1979 when attracted.
The provisions contained in section 154(6) shall come into play if there is any objection to the service of notice which is of a nature which can be held to be an objection in the proceedings meaning thereby that there is no objection to the jurisdiction of the assessing officer, but it will not apply if there is objection to the proceedings meaning thereby that if there is objection to very jurisdiction vesting in the assessing officer. An objection to the validity of service of notice under section 65 is an objection to the proceedings and not an objection in the proceedings; therefore, the provision contained in section 154(6) will not cure the defect and shall not confer jurisdiction on an assessing officer, which, is not otherwise vested in him.
(c) Income Tax Ordinance (XXXI of 1979)---
----S.65---Additional assessment---Notice under S.65, Income Tax Ordinance, 1979, was not served on the assessee---If notice under S.65 of the Ordinance was not served on the assessee, Income Tax Officer had not acquired the jurisdiction to initiate the reassessment proceedings.
M. Sadiq Butt, D.R. for Appellant.
Abdul Haq Kang for Respondent.
Date of hearing: 22nd September, 1994.
ORDER
The above appeals are directed against the order, dated 26-9-1991 by the learned C.I.T. (Appeals-II), Lahore in I.T.As. Nos. 741 and 7112 relating to the assessment years 1983-84 and 1984-85.
2. The sole grievance of the Department is that the learned C.I.T.(A) was not justified in cancelling the additional assessments framed under section 65.
3. Mr. Muhammad Sadiq Butt, learned Representative for the Department and Mr. Abdul Haq Kang, learned counsel for the respondent.
4. Briefly stated the relevant facts are that original assessments in respect of the respondent were completed under section 59(1) under the Self ?Assessment Scheme and subsequently the assessments were reopened under section 65 and the assessments were completed under section 62/65. The respondent assailed the validity of assessment orders on factual plane as well as legal plane. It was contended that the service of statutory notice under section 65 was not proper and, therefore, the assessments framed on the basis of such service were illegal. It was pleaded that the notices under section 65 were not served at all and, therefore, all the proceedings 'on the basis of such notices were illegal and void. The learned C.I.T(A) after examination of record held that notices under section 65 were not served on the respondent as the signatures available thereon had no resemblance with the signatures available on the returns of income. He, therefore, held that in such circumstances the orders' passed in pursuance of such notice were not sustainable in the eyes of law. The learned C:I.T(A) cancelled the assessments holding that due to non-?service of notice under section 65 of the entire proceedings stood vitiated.
5.The Department being aggrieved with the cancellation of assessments has contended that' the respondent had made compliance of notice and, therefore, the validity of service of notice cannot be challenged by virtue of the provisions confined in section 154(6) of the Income Tax Ordinance, 1979. The learned counsel for the respondent has contended that the point in issue already stands decided by the Tribunal wherein it has been held that if a notice under section 65 is not served on an assessee the entire proceedings shall be deemed to be without jurisdiction and the assessments would be void. It has been held further that the provisions contained in section 154(6) shall not be applicable in the case where the entire proceedings are without jurisdiction.
6.I have carefully considered the contentions raised by the learned Representatives for the parties. I am of the opinion that the service of requisite notice on the assessee is a condition precedent to the validity of any re?assessment made under section 65 and if a valid notice is not issued as required or it is not served validly and properly, the proceedings taken by the I.T.O. in pursuance of such invalid notice and consequent orders of re-assessment passed by the I.T.O. would be void and inoperative. The notice prescribed under section 65 cannot be regarded as a mere procedural requirement as the exercise of jurisdiction by the I.T.O. is dependent on the proper service of notice on the assessee. Thus, if no notice is issued or if the notice as issued is shown to be invalid of the notice is not properly served on an assessee then the validity of the proceedings taken by the I.T.O. without a notice or in pursuance of an invalid notice would be illegal and void. It has been held by Hon'ble Sindh High Court in C.P. No.D-447/88, Bhambore Ceramics Industries v. ITO, Circle F-3, South Zone, Karachi that, where for initiating any action service of notice is a precondition and such notice is without jurisdiction, all the proceedings and actions taken in pursuance thereof will be without jurisdiction". I am further of the view that the provisions contained in section 154(6) shall come into play, if there is any objection to the service of notice which is of a nature which can be held to be an objection in the proceedings meaning thereby that there is no objection to the very jurisdiction of the assessing officer, but it will not apply if there is objection to the proceedings meaning thereby that if there is objection to very jurisdiction vesting in the assessing officer. An objection to the liability of service of notice under section 65 is an objection to the proceedings and not an objection in the proceedings, therefore, the provision contained in section 154(6) will not cure the defect and shall not confer jurisdiction on an assessing officer which is not otherwise vested in him.
7. For the foregoing reasons I am of the view that the learned C.LT.(A) has rightly cancelled the assessment for the reason that the notice under section 65 was not served on the assessee and, therefore, the I.T.O. had not acquired the jurisdiction to initiate the re-assessment proceedings. The impugned finding of learned C.I.T(A) is not open to any exception which is? hereby confirmed.
8. The appeals stand dismissed accordingly.
M.BA./96/T???? ?????????????????????????????????????????????????????????????????????? Appeals dismissed.