1995 P T D 1239
[Lahore High Court]
Before Mian Allah Nawaz and Ahmad Saeed Awan, JJ
MUHAMMAD JAMIL KHAN
Versus
COMMISSIONER OF WEALTH TAX
C.T.R. No. 120 of 1993, decided on 22/02/1995.
(a) Wealth Tax Act (XV of 1963)---
---Ss. 16(2) & 14(2)---Return of wealth---Assessment---Analysis of Ss.14(2) & 16(2) of the Wealth Tax Act, 1963---Aims and objects of Ss.14(2) & 16(2) of the said Act are wholly different and both these sections cater for different situations---Notices under Ss.14(2) & 16(2) of the Wealth-tax Act, 1963-- Purposes---Issuance arid service of notices under Ss.14(2) & 16(2) of the Act simultaneously is not legal and renders the proceedings pursuant thereto coram non judice.
The plain reading of section 15, Wealth-tax Act, 1963 makes it clear that any person whose net wealth on the date of evaluation is such which makes him liable to pay the tax, he shall file his return of same in a prescribed form and verified in a prescribed manner. Subsection (2) empowers the Wealth Tax Officer to issue notice to any such person who has not filed his return. Section 16, subsection (1) of the said Act states that if the Wealth Tax Officer is satisfied with the return filed by such owner, he shall assess his net wealth, determine his tax liability and may refund if admissible to him. Subsection (1) of section 16 covers situation where Wealth Tax Officer is not satisfied with return filed under section 14 of the Act. It mandates the Wealth Tax Officer to issue a notice to such an owner calling upon him to appear before him on the prescribed date alongwith his evidence in support of his return. Subsection (3) of this section is the last stage in process of assessment. It empowers the Wealth Tax Officer to finally assess the wealth of such owner. From the above analysis it .is but clear that section 14(2) and section 16(2) of the Act pertain to wholly different situations and serve different purposes. Section 14(2) comes into play where any person who is the owner of wealth liable to tax and does not file his return. This is all what is required by section 14(2) of the Act. Section 16(2) of the Act covers wholly different situation. It comes to play when the Wealth Tax Officer finds return furnished by owner of wealth is inadequate and insufficient. He is empowered under the law to give a notice to such person asking him to appear on a specified date and produce evidence in support of his return. It, therefore, becomes crystal clear that the object of notice under section 16(2) is entirely dissimilar to object of notice under section 14(2). The aim of notice under section 16(2) of the Act is to give an opportunity to owner, whose return has been found unsatisfactory, to support his return by leading evidence. This notice is in line with the principles of natural justice "that nobody should be condemned unheard". This principle is well-settled and forms, foundation of dispensation of justice in Pakistan.
In the light of analysis of section 14(2) and section 16(2) of the Act, there is no difficulty to conclude that the aim and object of section 14(2) and section 16(2) of the Act are wholly different and they cater for different situations. Notice under section 14(2) is an intimation asking the owner of wealth who has not filed his return, to file the same. The aim and object of section 16(2) is to provide opportunity of hearing to person who has filed his return but it has been found unsatisfactory by the Wealth Tax Officer. Notice under section 16(2) of the Act is condition precedent for the purpose of passing an order of final assessment. Very clearly the notice under section 14(2) and section 16(2) of the Act cannot be contemporaneous but notice under section 16(2) to follow the first in circumstances detailed above. In the present case no notice under section 16(2) was issued to the assessee and the Wealth Tax Officer had issued both notices on the same date and had passed the order of assessment' according to law. This being the position, the proceedings commencing from the Wealth Tax Officer to Appellate Tribunal were coram non judice and therefore, the orders passed by the Wealth Tax Officer, First Appellate Authority and Tribunal were clearly without any lawful authority and without lawful effect.
Sultan Ahmad v. Controller of Estate Duty 1985 CLC 565; Commissioner of Income Tax East Pakistan v. Fazlur Rehman PLD 1964 SC 410; Province of East Pakistan v. Noor Muhammad PLD 1964 SC 451; Fundamental Rights and Constitutional Remedies in Pakistan, page 522 by Syed Sharif-ud-Din Pirzada and PLD 1965 Journal Section 1 ref.
(b) Maxim...
----"Audi alteram partem" (no man shall be condemned unheard)----- Application.
Sultan Ahmad v. Controller of Estate Duty 1985 CLC 565; Commissioner of Income Tax East Pakistan v. Fazlur Rehman PLD 1964 SC 410; Province of East Pakistan v. Noor Muhammad PLD 1964 SC 451; Fundamental Rights and Constitutional Remedies in Pakistan, page 522 by Syed Sharif-ud-Din Pirzada and PLD 1965 Journal Section 1 ref.
Dr. Ilyas Zafar for Applicant.
Shahbaz Butt for Respondent.
Date of hearing: 22nd February, 1995
JUDGMENT
AHMAD SAEED AWAN, J.---This is a Reference under section 27(1) of the Wealth Tax Act (No.15 of 1963) (hereinafter called the Act) on the following question.
"Whether under the facts and circumstances of the case the Hon'ble Tribunal was justified to confirm the value of properties made by the Wealth Tax Officer on ad hoc basis without determining the GARV/ALV or without regarding the nature and size of the property."
2.The facts, briefly stated, giving rise to this Reference are: that Mr. M. Jamil Khan/assessee, filed his wealth tax return in pursuance of notice under sections 14(2) of the Act. He declared therein that four shops owned by him; valued Rs.39,637. This return, however, was found. Unsatisfactory, by the Wealth Tax Officer on 5-5-1991 and on- the same day he assessed the aforesaid properties at the value of Rs.32,50,000. Feeling aggrieved, the assessee preferred an appeal which was dismissed by the first appellate authority vide order, dated 12-10-1991. Still dissatisfied, he filed second appeal which too failed and was dismissed by the Appellate Tribunal vide order; dated 7-3-1992. In this background, the unsuccessful assessee moved a petition under section 27(1) of the Act for reterring four questions to this Court for answer. After hearing the learned counsel for applicant, the Appellate Tribunal referred the aforestated question to this Court under section 27 of the Act, for answer. '
3. The learned counsel for the assessee, in support of this Reference, contended that the proceedings before the Wealth Tax Officer were coram non judice on account of being in defiance of principle of natural justice embodied in section 16(2) of the Act. According to the learned counsel, no notice whatsoever, was given to assessee under section 16(2) of the Act and so the proceedings from commencement to finish were wholly void and without lawful authority. He further contended that this aspect of the case was fully argued before the Tribunal in the first instance as well as in the second instance and also was raised in application under section 27(1) of the Act. On these circumstances it was argued that this Court was competent to adjudicate and answer this question.
4. The learned counsel for the respondents, fully supported the order passed by the Wealth Tax Officer, dated 5-5-1991, the order passed by' the first appellate authority dated 12-10-1991, and the order passed by the Appellate Tribunal, dated 7-3-1992. It was urged that the two notices were issued to the assessee i.e. one under section 14(2) and the other under section 16(2) of the Act, on the same date. According to the learned counsel, this mode of issuing two notices was not prohibited either by section 14(2) or section 16(2) of the Act. He further stressed that these questions were raised before the first appellate authority as well as the Tribunal and before the application given under section 27(1) of the Act. He had no cavil that this question arose out of Appellate Tribunal's order and this Court could answer it.
5.In order to understand the relevant contentions of the parties, it seems necessary to set down section 14 and section 16 of the Act which read as under:
"14. (1) Every person whose net wealth on the valuation date was of such an amount as to render him liable to wealth tax under this Act shall, on or before the 1st day of October of the corresponding assessment year, furnish to the Wealth Tax Officer a return in the prescribed form and verified in the prescribed manner setting forth his net wealth as on that valuation date.
(2) If the Wealth Tax Officer is of the opinion that the net wealth of any person is of such an amount as to render him liable to wealth tax under this Act, then, notwithstanding anything contained in subsection (1), he may serve a notice upon such person requiring him to furnish within thirty days from the date of service of such notice, or such longer or shorter period as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner and setting fourth such other particulars as may be required in the notice, the net wealth of such person as on the valuation date mentioned in the notice.
(3) The Wealth Tax Officer may, if he is satisfied that it is necessary so to do extend the date for the delivery of the return under this section.
16.(1)If the Wealth Tax Officer is satisfied without requiring the presence of the assessee or production by him of any evidence that a return made under section 14 or section 15 is correct and complete, he shall assess the net wealth of the assessee and determine the amount of tax payable by him or the amount refundable to him on the basis of such return.
(2) If the Wealth Tax Officer is not so satisfied, he shall serve a notice on the assessee either to attend in person at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the assessee may rely in support of his return.
(3) The Wealth Tax Officer, after hearing such evidence as the person may produce and such other evidence as he may require on any specified point and after taking into account all relevant material which Wealth Tax Officer has gathered, shall by order in writing, assess the net wealth of the assessee and determine the amount payable by him as tax or the amount refundable to him.
(4) For the purpose of making an assessment under this Act, the Wealth Tax Officer may serve on any person who has made a return under subsection (1) of section 14 or upon whom a notice has been served under subsection (2) of that section or who has made a return under section 15, a notice requiring him to produce or cause to be produced on a date specified in the notice such accounts, records or other documents as the Wealth Tax Officer may require.
(5) If any person fails to make a return in response to any notice under subsection (2) of section 14 or fails to comply with the terms of any notice issued under subsection (2) or subsection (4), the Wealth Tax Officer, after taking into account all relevant material which he has gathered, shall make the assessment to the best of his judgment and determine the amount payable by the person as wealth tax or the. amount refundable to him on the basis of such assessment."
The plain reading of section 14 makes it clear that any person whose net wealth on the date of evaluation is such which makes him liable to pay the tax, he shall file his return of same in a prescribed form and verified in a prescribed manner. Subsection (2) empowers the Wealth Tax Officer to issue notice to any such person who has not filed his return. Then we come to section 16 of the Act. Subsection (1) of it states that if the Wealth Tax Officer is satisfied with the return filed by such owner, he shall assess his net wealth, determine his tax liability and any refund if admissible to him. Subsection (2) of the section 16 covers situation where Wealth Tax Officer is not satisfied with return filed under section 14 of the Act. It mandates the Wealth Tax Officer to issue a notice to such an owner calling upon him to appear before him on the prescribed date alongwith his evidence in support of his return. Subsection (3) of this section is the last stage in process of assessment. It empowers the Wealth Tax Officer to finally assess the wealth of such owner. From the above analysis it is but clear that section 14(2) and section 16(2) of the Act pertain to wholly different situations and serve different purposes. Section 14(2) comes into play where any person who is the owner of wealth liable to tax and does not file his return. This is all what is required by section 14(2) of the Act. Section 16(2) of the Act covers wholly different situation. It comes to play when the Wealth Tax Officer finds return furnished by owner of wealth is inadequate and insufficient. He is empowered under the law to give a notice to such person asking him to appear on a specified date and produce evidence in support of his return. It, therefore, becomes crystal clear that the object of notice under section 16(2) is entirely dissimilar to object of notice under section 14(2). The aim of notice under section 16(2) of the Act is to give an opportunity to owner, whose return has been found unsatisfactory, to support his return by leading evidence. This notice is in line with the principles of natural justice "that no body should be condemned unheard". This principle is well-settled and forms foundation of dispensation of justice in our country. While dealing with this aspect his Lordship Mr. Justice Naimuddin (as he then was) while speaking for the Bench in Sultan Ahmad v. Controller of Estate Duty 1985 CLC 565 said:
"Before considering this submission, we may state that the principle of audi alteram partem (no man shall be condemned unheard) is a well settled principle.
This principle is not confined only to the Court and judicial proceedings, but extend to all proceedings by whomsoever held which may affect the person or property or other rights of the parties concerned in dispute and the maxim will apply with no less force to proceedings which affect liability to pay a tax or duty. See Commissioner of Income Tax East Pakistan v. Fazlur Rehman PLD 1964 SC 410.
Further, this principle is presumed to be embodied in each and every statute in the absence of a provision to the contrary (See Province of - East Pakistan v. Noor Muhammad PLD 1964 SC 451'.
We may also quote here a passage from the book Fundamental Rights and Constitutional Remedies in Pakistan, page 522 by Syed Shraif-ud- Din Pirzada:---
" audi alteram partem literally means `hear the other side: The origin of this principle is alleged to be traceable to the dawn of time. Fortesque, J. in R. v Chancellor of Cambridge 172 Medea 195: 1723 Fortesque 202 suggests that the principle was invoked in the investigation of the first offence on record.
`The laws of God and man both give the party an opportunity to make his defence, if he has any. I remember to have, heard it observed by a very learned man upon such an occasion, that even God Himself did not pass sentence upon Adam, before he was called upon to make his defence. Adam (says God) where art thou? Hast thou not eaten of tree, whereof I commanded thee that thou should not eat? And the same question was put to Eve also."
Murshed, C.J. says: PLD 1965 Journal Section I, it would be a grievous mistake to think that this principle is of purely Hellenistic. Roman or Continental origin. It governs every civilized system of society. In Mishkat, `Babul Qazaa' (Chapter on Justice), a Hadith of the Holy Prophet (p.b.u.h.) is 'quoted from Tirmizi Abu Daood and Ibne Maajah, to the following effect:---
Once the Prophet of God (p.b.u.h.) appointed Hazrat Ali, in his earl youth, to the judgeship of Yemen. Hazrat Ali pointed to his youth, and inexperience and confessed his lack of acquaintanceship with the intricacies and requirements of such a responsible undertaking. The Holy Prophet (p.b.u.h.) replied `God will guide you and give you I strength in your pronouncements, if in deciding issues between parties, you wilt not decide in favour of one such party without hearing the 8 other side:
This is the very basis of justice. The doctrine of audi alteram partem is deeply embedded in the Shariat of Islam; it is not mere carbon -impressed copy from the Institutes of Justinian.".
Guided by the above rule and in the light of analysis of section 14(2) and section 16(2) of the Act, we have no difficulty in saying that the aim and object of section 14(2) and section 16(2) of the Act are wholly different and they cater for different situations. Notice under section 14(2) is an intimation asking the owner of wealth who has not filed his return, to file the same. The aim and object of section 16(2) is to provide opportunity of hearing to person who has filed his return but it has been found unsatisfactory by the Wealth Tax Officer. Notice under section 16(2) of the Act is condition precedent for the purpose of passing an order of final assessment. Very clearly the notice under section 14(2) and section 16(2) of the Act cannot be contemporaneous but notice under section 16(2) to follow the first in circumstances detailed above. It is a common ground between the parties that no notice under section 16(2) was issued to the applicant and the Wealth Tax Officer had issued both notices on the same date and had passed the order of assessment according to law. This being the position, we have no difficulty in coming to the conclusion that the proceedings commencing from the Wealth Tax Officer to Appellate Tribunal were coram non judice, and therefore, the orders passed by the Wealth Tax Officer, First Appellate Authority and Tribunal were clearly without any lawful authority and without lawful effect. We answer the question accordingly and direct the Wealth Tax Tribunal to proceed with the matter in accordance with above answer. A copy of this order shall be immediately sent to Wealth Tax Officer.
M.BA./M/2139/Lah Order accordingly.