W.T.AS. NOS. 408/KB TO 410/KB OF 1998-99 VS W.T.AS. NOS. 408/KB TO 410/KB OF 1998-99

2000 P T D (Trib.) 2424

[Income-tax Appellate Tribunal Pakistan]

Before Muhammad Mahboob Alam, Accountant Member and Tahseen Ahmed

Bhatti, Judicial Member

W.T.As. Nos. 408/KB to 410/KB of 1998-99, decided. on 17th November, 1999.

Wealth Tax Act (XV of 1963)---

----S. 17---Wealth escaping assessment--- assessee excluded, some properties from his wealth tax return being benami owner claiming that funds were provided by the son of the assessee for purchase of said properties Properties were declared in the wealth tax return of the assessee's son which were assessed in the hands of the assessee's son by the Department-- Assessing Officer re-opened the case of the assessee under S.17, Wealth Tax Act, 1963 and included the said properties in the net wealth of the assessee-- First Appellate Authority confirmed the treatment of the Assessing Officer-- Validity---Claim of the assessee that assets had already been taxed in the hands of the son had not been disputed by the Department in respect of any of the assessment years involved---Claim of the assessee that these assets wire purchased out of funds provided by the 'son had also not been subjected to any verification by the Assessing Officer, in other words the claim of the assessee that he was not the real owner of the properties and was just a benami holder had not been rebutted by the Assessing Officer. with any evidence brought on record and the claim of the assessee about being a just benami holder of these assets remained uncontroverted---Assessments of these assets in the hands of the son having been completed and not annulled before their subsequent inclusion in the wealth of the father/assessee did not make the re-,assessment maintainable and were accordingly vacated by the Appellate Tribunal.

(1971) 23 Tax 223 (SC) ref.

Jawed Zakaria and Jan-e-Alam for Appellant.

Muhammad Umer Farooq, D.R. for Respondent

Date of hearing: 22nd July, 1999

ORDER

MUHAMMAD MAHBOOB ALAM (ACCOUNTANT MEMBER).---These three appeals are directed against CIT (A)'s Order No. CIT(A)/III/98/478, 479 & 480, dated 20-12-1998. The appellant has contested the confirmation of re-opening of the case under section 17 of the Wealth Tax Act and the inclusion of assets in the form of property in the hands .of the appellant when the said assets has already been assessed in the hand of the son of the appellant. The issue being common in all the three years are disposed of by this single order.

2. The learned D.R. and A.R. have been heard.

3. The facts of the case are that. The original assessment years for. 1993-94 had been finalised under section 16(3) of the Wealth Tax Act on 28-2-1994 at a net wealth of Rs.12,43,171; The assessment for 1994-95 was completed under section 16(3) on 30-6-1996 at a net wealth of Rs.12,14,542 while the assessment for 1995-96 was finalised on 30-6-1996 at a net wealth of Rs.11,11,713. On the basis of information received from Defence Housing Authority, it was found by the Assessing Officer that the following properties were recorded as being in the ownership of the appellant during the assessment year 1993-94.

"(1) Plot No. 16-C, Sahr Lane, D. H. A. Karachi.

(2) Plot No.22-C, Muslim Comm. St.2, Phase VI; D.H.A

(3) Plot No.174 29th St. Ph-VI, Q.H.A., Karachi."

4. For the assessment year 1994-95 also all the three above properties were in the name of the appellant/assessee. For the assessment year 1995-96, however, only property No. 174. 29th Street Phase VI, Defence Housing Authority, Karachi, was recorded to be in the ownership of the appellant, while the other two properties had been disposed of. As these properties were not found to be declared in the wealth tax return for. the relevant years', the case was re-opened under section 17 and notice under section 16(3) was issued to the appellant to explain as to why this property could not be included in his wealth. In reply to this notice it was pleaded before the Assessing Officer that the properties in question had been duly declared in the Wealth Tax of the appellant/assessee's son Mr. M....Y...S...bearing NTN No.12-05-0708867, and there was no question of re-opening of the assessment of the appellant/assessee. On examination of case record of Mr. M...Y...S...., the contention of the appellant was found to be correct. However, it was held by the Assessing Officer that ownership of the properties being in the name of the appellant of assessee there was no justification for declaring them in the wealth tax return of his son and not his own return. According to the Assessing Officer this was deliberately arranged by the appellant/assessee to conceal his wealth with mala fide intention as otherwise the inclusion of these properties would have resulted in creation of a much higher tax liability than otherwise paid by the appellant/assessee. The re-opening of the case was therefore justified by Assessing Officer and properties in question and re-assessment was finalised by including value of these properties in the net wealth of the appellant/ assessee in respective years. This treatment was confirmed by the CIT(A). It is against this treatment by the officers below that the appellant has filed the present three appeals.

5. The relevant assessment order and the impugned order of the learned CIT(A) have been perused. It is seen that at the assessment stage, it was pleaded by the appellant that the fund for the purchase of the said plots had beets provided by his son and the appellant was just a benami owner. It was explained to the Assessing Officer that this fact was also verifiable from the wealth tax re-conciliation of the son available in the assessment record. It was further submitted that as these properties had already been declared in the wealth tax return of his son and has been subjected to assessment by the Department, there was no question of any concealment of assets and the proceedings initiated under section 17 of the Wealth Tax Act were unjustified. This plea of the appellant did not find fovour with the Assessing Officer. It also did not find favour with the learned CIT(A) on the ground that the doctrine of benami transaction did not fit in the case, where concealment was detected prior to the disclosure by the appellant and as such all the three appeals were dismissed by him.

6. Before us, the learned counsel for the appellant has pointed-out that there-was no justification for re-assessment by inclusion of the plots in the net wealth of the appellant when these assets had already been included in the wealth of the son and had been assessed to tax as such. The assessment in the case of his son having not been cancelled by the Department, The re assessment through inclusion of these very properties in the father's net wealth amounted to double assessment of the assets which Was not justified in law. Reliance, in this regard, was placed upon a number of cases. the main being one recorded as (1971) 23 Tax 223(SC) of Pakistan, whereby it has been held:

.......It was also anomalous to maintain that an income which had already -been taxed has escaped assessment or has been taxed at too low a rate etc. The position which emerges out, therefore, is that the income derived from the joint venture by the three associates having been charged to tax in their respective hands and no step taken for annulment of their assessments the same income could not be taxed again in their hands as income of a separate entity."

7. Placing reliance on this case, it has been pleaded by the learned counsel for the appellant that the proceedings initiated under section 17 being without any lawful authority was not maintainable. The learned D.R. has however, supported the order of the officers below. .

8. The matter has been considered. On the factual ground, it is seen that claim of the appellant that assets had already been taxed in the hands of the son has not been disputed by the Department in respect of any of the assessment years involved. The claim of the appellant that these assets were purchased out of fund provided by the son has also not been subjected to any verification by the Assesssing Officer. In other words the claim of the appellant that he was not a real owner of the property and was just a banami holder has not been rebutted by the Assessing Officer with any evidence A brought on record so that the claim of the appellant about being a just benami holder of these assets remains uncontroverted. On the basis of this factual position, the case cited by the learned counsel for the appellant is. found to be on fours with the facts obtaining in the preset-t case. The assessments of these assets in the hand of the son having been completed and not being annulled before their subsequent inclusion in the wealth of that father does not make the re-assessment, maintainable and accordingly, all the three orders of officer below are vacated.

9. The appeals for all the years stand allowed.

C.M.A./M.A.K./28/Tax(Trib.)Appeals accepted.