(a) Wealth Tax Act (XV of 1963)---

---S. 27(1)---Income-tax Appellate Tribunal Rules, 1948, R. 34---Appeal-- Limitation---Department filed appeal after 16 months from the date of service of an order received by Inspector of the Commissioner's office ---Assessee objected that appeal was time-barred as the same had to be filed within 60 days from the date of receipt of order of the Tribunal---Department contended that starting point of limitation for filing appeal would he governed from the date when the judgment of the Appellate Tribunal was put up or brought to the notice of the Commissioner, who was the authority to decide as to whether appeal was to be filed against the order of the Tribunal or not and that service on Inspector or any body else would not amount to service on the Commissioner as envisaged by R.34 of the Income-tax Appellate Tribunal Rules, 1948---Validity---Service of the order of the Appellate Tribunal on the Income Tax Inspector would not amount to communication of the order to the Commissioner as envisaged by R.34 of the Income-tax Appellate Tribunal Rules, 1948---Period of limitation for filing appeal would be calculated not from the date on which the Income Tax Inspector had received the copy of the order of the Tribunal but from the date when the order of the Appellate Tribunal was brought to the notice of the concerned Commissioner---Dismissal of appeal of the Department as time-barred would result in acting in aid of injustice by not strictly following the technicalities of R.34 of the Income-tax Appellate Tribunal Rules, 1948.

E.A. Evans v. Muhammad Ashraf PLD 1964 SC 536; Jayalakshmi Cloth Stores v. Income-tax Officer 1982 PTD 73; Nandram Hunatram y. Commissioner of Income-tax (1959) 37 ITR 5110; Gopiram Bhagwandas v. Commissioner of Income-tax (1956) 30 ITR 8 and Muhammad Saleem v. Superintendent of Police, Sialkot fLD 1992 St.' 369 re-1.

(b) Wealth Tax Act (XV of 1963)---

----Ss.5(1)(xv), Second Sched., Part I, Cl. 9 (iii) & 17---C.B.R. Circular No.3/12-WT/85, dated 1-6-1985---Income Tax Ordinance (XXXI of 1979) Second Sched., cl. 171---Exemption---Encashment of Foreign Exchange Bearer Certificates---Effect on claim for exemption- --Appellate Tribunal allowed exemption on amount obtained by the assessee by encashment of Foreign Exchange Bearer Certificates from charge of wealth tax in view of S.5(i)(xv) of the Wealth Tax Act, 1963---Validity-,-.-Clause 171 of the Second Sched. to the Income Tax Ordinance 1979 specifically provided exemption to the amount received on encashment of such certificates issued m pursuance--of the Foreign Exchange Certificates Rules, 1985, whereas c1.9(iii) of the Second Sched. to the Wealth Tax Act, 1963 provided exemption from charge to wealth tax only in respect of certificates issued in pursuance of the Foreign Exchange Bearer Certificates Rules, and did not speak of the money/amount held or possessed by an assessee ' from encashment of the certificates issued under the Foreign Exchange Bearer Certificates Rules, 1985---Clause 171 of the Second Sched. to the Income Tax Ordinance specifically and unambiguously provided exemption from charge to income-tax in respect of the amount received or possessed by an assessee from encashment of Foreign Exchange Bearer Certificates exemption clause in the Wealth Tax Act 1963, however, provided exemption only to the Foreign Exchange Bearer Certificates and not to the amount possessed by an assessee from encashment of the Foreign Exchange Bearer Certificates-- Reference by the Appellate Tribunal to cl.171 of the Second Sched. to the Income Tax Ordinance, 1979 was not at all justifiable and the Appellate Tribunal erred in importing the meaning of cl. 171 of the Second Sched. to the Income Tax ordinance, 1979 and applying same to cl. 9 (iii) of the Second Sched. to the Wealth Tax Act, 1963---Order of Appellate Tribunal was set aside by the High Court.

Shaikh Haider for Appellant.

K. Salahuddin for Respondent.

Date of hearing: 15th September, 1998.

JUDGMENT

SAIYED SAEED ASHHAD, J.---This Income Tax Appeal has been filed by the appellant/Department against the order of the Income-tax Appellate Tribunal, dated 7-12-1995, framing the question of law for seeking opinion of this Court. The question of law is as under:-J-

"Whether on the facts and circumstances of the case, the learned Tribunal was justified to allow exemption on Rs.1,20,000 being assets -created by encashment of F.E.B.C. and not out of remittances received through normal banking channel under section 5(1)(xv) (now clause (d), Part I of the Second Schedule of the Wealth Tax Act, 1963)."

Mr. Khalifa Salahuddin, learned counsel for the respondent/assessee, objected to the maintainability of the appeal on the ground that it was hopelessly time barred and further that the applicant/Department did not submit any application for condonation of the delay in filing the appeal. In this connection he pointed out that the Appellate Tribunal had decided the appeal on 7-12-1995 and the order of the Appellate Tribunal was forwarded and reached the Office of the Regional Commissioner of Income-tax, Southern Region, where it was received by one Pervez, an Income Tax Inspector. He further submitted that the appeal was filed on 14-10-1997, i.e., after 16 months from the date on which copy was supplied to the Department whereas in accordance with the provisions of section 136 it ought to have been filed within a period of 60 days from the date of receipt of the order of the Tribunal. He prayed that in view of the afore stated facts, the appeal be dismissed as time-barred.

Mr. Shaikh Haider vehemently rebutted the arguments advanced by Mr. Khalifa Salahuddin and submitted that the starting point of limitation for filing the appeal would be governed from the date when the judgment of the Appellate Tribunal was put up or brought to the notice of the Commissioner, who was the authority to decide as to whether an appeal was to be filed against the order of the Tribunal or not. He further submitted that forwarding the copy to the Income Tax Department and receipt thereof by an Inspector or any-body else would not amount to service on the Commissioner as envisaged by Rule 34 of the Income-tax Appellate Tribunals Rules. He further submitted that from the contents of the affidavit of Mr. Akhter Jamil Khan, Commissioner of Income-tax, Zone-B, Karachi, it is absolutely clear that the copy of the judgment of the Appellate Tribunal. dated 7-12-1995 was placed before the Commissioner of Income-tax, Zone B, on 15-8-1997 and as he was the appropriate authority to decide as to whether an appeal against the said order was to be filed or not, the presentation of appeal in this Court on 14-10-1997 was within the period of 60 days postulated under section 136 U1 the Income Tax Ordinance. In support of his contention that service on the Inspector or any other officer of the Income Tax Department would not amount to proper and valid service of the order of the Appellate Tribunal' as contemplated by Rule 34 of the Income-tax Appellate Tribunals Rules, 1948 ne placed reliance on the cases of (i) E.A. Evans v. Muhammad Ashraf, reported in PLD 1964 SC 536; (ii) Jayalakshmi Cloth Stores v. Income-tax Officer, reported in 1982 PTD 73; (iii) Nandram Hunatram v. Commissioner of Income-tax, reported in (1959) 37 ITR 500; and (iv) Gepiram Bhagwandas v. Commissioner of Income-tax, reported in (1956) 30 ITR 8.

In the first cited case the Hon'ble Supreme Court while dealing with the notice contemplated under section 30(1) of the Displaced Persons (Compensation and Rehabilitation) Act held that notice was required to be given in the manner prescribed, i.e. within one month of transfer of a property by registered post (acknowledgement due). It was further held that in the presence of such clear and unambiguous words it was difficult to hold that an implied notice would be sufficient and to do so would be to render the words "by registered post (acknowledgement due)" in the proviso redundant.

In the second cited case Andhra Pradesh High Court held that service of order of the Appellate Assistant Commissioner on a person other than mentioned in Memorandum of Appeal was not valid service in law. It was further held that limitation for appeal to Tribunal starts from date of service of order on proper person.

In the third cited case Orissa High Court while considering the provisions of section 22 of the Indian Income Tax Act and Rule 34 of the Appellate Tribunal Rules, 1946 held that handing over of the order of the Appellate Tribunal to the Advocate of the assessee was not sufficient compliance with the mandatory provisions of Rule 34 of the Appellate Tribunal Rules under which was the duty of the Tribunal to cause the order passed by it to be communicated to the assessee. The Orissa High Court expressed this view on the ground that the Vakalatnama filed by the Advocate did not authorise him to receive, the order. It was further held that the date of receipt of the order by the advocate could not be taken to be the starting point for limitation.

In the fourth cited case Patna High Court held that service of notice of Tribunal's order on a lawyer or an agent not authorised to receive notice was no service as there was no valid communication of the order of the Appellate Tribunal to the assessee as required by Rule 34 of the Appellate Tribunal Rules which strictly required notice of the order passed by the Tribunal to be served on the assessees.

In all the three cases of Indian origin, the Courts had made the pronouncements on. taking into consideration Rule 34 of the Appellate Tribunal Rules, 1946, which reads as under:--

"The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner. "

The provisions of Rule 34 of the Income-tax Appellate Tribunal Rules, 1948 are exactly similar to Rule 34 of the Appellate Tribunal Rules, 1946 and it will be appropriate to reproduce Rule 34 of the Income-tax Appellate Tribunal, Rules 1948:

"The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner."

Since the provisions of Rule 34 of the Appellate Tribunal Rules, 1946 and the Income-tax Appellate Tribunal Rules, 1948 are absolutely similar, the pronouncements made by the Andhra Pradesh High Court, the Orissa High Court and the Patna High Court referred to hereinabove would also be applicable to the service of notice of order of the Appellate Tribunal as provided by Rule 34 of the 1948 Rules. Thus, service on the Commissioner, would be held valid and proper when the notice of the order of the Appellate Tribunal orders is served on the Commissioner. It may also be pointed out that in view of the observations made by the Supreme Court in the case of E.A. Evens v. Muhammad Ashraf, PLD 1964 SC 536, service of notice of the Appellate Tribunal's order could not be validly effected on the Commissioner in any manner other than the one provided by Rule 34 of the Rules. However, service could be validly effected on an agent or authorised representative duly constituted by the Assessee or Commissioner. The matter which requires determination is whether the arrangement arrived at between the learned Chairman of the Appellate Tribunal and the learned Regional Commissioner of Income-tax whereby copies of the orders of the Appellate Tribunal were to be sent to the Income Tax Department after a large number of orders had accumulated and the Income Tax Inspector was authorised to receive them would amount to authorisation by the concerned Commissioner. No doubt the Regional Commissioner, as head of the Income Tax Department would be having administrative authority over the concerned Commissioner but such authorities would be exercisable relating to departmental work or routing administrative functions of the Income Tax Department. The Regional Commissioner of the Income Tax as head of the Income Tax Department could not interfere, usurp or curtail rights or the powers conferred on the Commissioner by a statute or the rules made there under. The right to receive copies of the order of the Tribunal by the Commissioner could be assigned or transferred in favour of any other person only by such Commissioner and not by the Regional Commissioner of the Income Tax in view of the observations made in the afore-cited three cases of the Indian origin.

In the circumstances, we hold that the service of the order of the Appellate Tribunal on the Income Tax Inspector would not amount to communication of the order to the Commissioner as envisaged by Rule 34 of the Income-tax Appellate Tribunal Rules, 1948. As such, the period of limitation for filing the Wealth Tax Appeal under section 27(1) of the Wealth Tax Act, would be calculated not from 9-5-1996, the date on which the Income Tax Inspector had received the copy of the order of the Tribunal but from 15-8-1997 when the order of the Appellate Tribunal in the case in hand was brought to the notice of the concerned Commissioner.

Mr. Khalifa Salahuddrn, appearing on `behalf of the respondent /assessee submitted that if Rule 34 was adhered to very strictly and was followed in letter and spirit then undue advantage would be made available to the applicant/department for filing appeals even after passage of long period of time and appeals which would on the face appear to be time-barred, ac in the present case, would be considered to have been filed within the period of limitation because the order of the tribunal was communicated to the concerned Commissioner after one year or two years or even more. He further submitted that it could never be the intention of the Legislature that undue advantage or benefit be given to a party for computing the period of limitation for filing the appeals. The arguments advanced by Mr. Khalifa Salahuddin do not merit consideration in view of our observations trade hereinabove after taking into consideration Rule 34 of the Income-tax Appellate Tribunal Rules and the case-law referred to us by Mr. Shaikh Haider, learned counsel for the applicant/department. We may refer here to the case of Muhammad Saleem v. Superintendent of Police, Sialkot, reported in PLD 1992 SC 369. In this case the Hon'ble Supreme Court expressed the view that for providing substantive justice the Court should not be influenced by the technicalities of law and they should not be allowed to be impediments in the cause of justice. It would be appropriate to reproduce the relevant portion from the judgment as under:

"This Court in similar circumstances has, however, held that whether an appeal was likely to succeed on the question of limitation but the case was otherwise unjust and did not merit interference in such situation was not proper and, accordingly, dismissed the appeal on the ground that the equitable writ jurisdiction could not be exercised in aid of injustice."

In the present case, we find that the applicant/department has a strong case on merits as in allowing the benefit to the respondent/assessee, the Appellate Tribunal has misinterpreted the circular of the C.B.R., which according to it provided the relief given by it to the respondent/assessee. In the circumstances, dismissal of the appeal of the applicant/department as time barred would result in acting in aid of injustice by not strictly following the technicalities of Rule 34 of the Income-tax Appellate Tribunal Rules, 1948.

In view of the above discussion, we are of the opinion that the appeal under section 27(l) of the Wealth Tax Act, filed by the applicant/department on 14-10-1997 was within the period of limitation stipulated in section 27 of the Wealth Tax Act and the objection raised by the respondent/assessee with regard to the aforesaid wealth tax appeal being time-barred is overruled.

With regard to the finding of the Appellate Tribunal allowing a sum of Rs.1,20,000 obtained by the respondent/assessee by encashment of Foreign Exchange Bearer Certificates from charge to wealth tax in view of section 5 (1)(xv) of the Wealth Tax Act, it is to be observed that the Appellate Tribunal had placed reliance upon Circular No.3/12-WT/85, dated 1-6-1985 by which the Wealth Tax Officer was prohibited from making any inquiry, whatsoever, with regard to the source of money invested or utilized for the purchase of the Foreign Exchange Bearer Certificates and was also stopped from conducing any inquiry or initiating' proceedings under section 17 of~ the Wealth Tax Act. For deciding the legality and propriety of the order of the Appellate Tribunal it would be necessary to examine Circular No.3/12-WT/85, which is as under:--

"Special National Fund Bonds and Foreign Exchange Bearer Certificates have been declared exempt from income-tax as well as from Zakat. The Bonds Certificates have also been declared exempt from wealth tax as a class of assets vide a separate Notification issued under section 5(2) of the Wealth Tax Act. The rules made for their purchase etc. provide that no question shall be asked by the taxation authorities regarding the source of these investments. As such a purchase or possession of either the special National Fund Bonds, or the Foreign Exchange Bearer Certificates comes to the notice of the Wealth Tax Officer, no proceedings under section 17 of the Wealth Tax Act are to be initiated."

From a plain reading of Circular No.3/12-WT/8 we are unable to visualize as to how the Appellate Tribunal could come to the conclusion that it had provided exemption from charge to wealth tax in respect of the money/amount received by a person from encashment/sale of the Foreign Exchange Bear Certificates. The Appellate Tribunal in allowing the exemption of the amount of Rs.1,20,000 owned/possessed by the respondent/assessee from encashment of Foreign Exchange Bearer Certificates relied on the provision of the Income Tax Ordinance providing exemption from charge to income-tax on the amount received on encashment of any certificates issued in pursuance of the Special National Fund Bonds and Foreign Exchange Bearer Certificates Rules. 1985 and concluded that by way of analogy it was to be held that the money amount received on encashment of Foreign Exchange Bearer Certificates would also be exempted from charge to wealth tax. For determining whether the reasoning advanced by the Appellate Tribunal would hold good, it would be necessary to reproduce the relevant provisions of the Wealth Tax Act and the Income Tax Ordinance providing exemptions to the amount/certificates/Foreign Exchange Bearer Certificates from charge to wealth tax and income-tax. Exemption from the wealth tax in respect of the Foreign Exchange Bearer Certificates is provided m clause (9), sub-clause (iii) of the Second Schedule to the Wealth Tax Act, which is reproduced as under:--

"Foreign Exchange Bearer Certificates., issued under the Foreign Exchange Bearer Certificates Rules, 1985."

Clause 171 of the Second Schedule to the Income Tax Ordinance which provides exemption in respect of the amount received on encashment of Foreign Exchange Bearer Certificates is as under:--

"Any amount received on encashment of any certificates issued in pursuance of the Foreign Exchange Bearer Certificates Rules, 1985."

From a plain reading of the aforesaid two provisions it is to be observed that clause 171 of the Second Schedule to the Income Tax Ordinance specifically provides exemption to the amount received on, encashment of any certificates issued in pursuance of the Foreign Exchange Certificates Rules, 1985, whereas clause (9) (iii) of the Second Schedule to the Wealth Tax Act provides exemption from charge to wealth tax only in respect of the certificates issued in pursuance of the Foreign Exchange Bearer Certificates Rules, and does not speak of the money/amount held or, possessed by an assessee from encashment of the certificates issued under the F.E.B.C. Rules, 1985. There is, thus, a clear distinction between the two clauses appearing in the Income Tax Ordinance and the Wealth Tax Act, relating to the exemptions. Clause 171 of the Second Schedule to the Income Tax Ordinance specifically and unambiguously provides exemption from; charge to income-tax in respect of the amount received or possessed by an assessee from encashment of Foreign Exchange Bearer Certificates. However, the exemption clause in the Wealth Tax Act provides exemption only to the Foreign Exchange Bearer Certificates and not to the amount possessed by an assessee from encashment of the Foreign Exchange Bearer Certificates. In the circumstance, reference by the Tribunal to Clause 171 of the Second Schedule to the Income Tax Ordinance was not at all justifiable and the Appellate Tribunal erred in importing the meaning of clause 171 of the Second Schedule to the Income Tax Ordinance and applying it to clause (9) sub-clause (iii) of the Second Schedule to the Wealth Tax Act. If it was the intention of the Legislature that the amount received or possessed by an assessee from encashment of Foreign Exchange Bearer Certificates would be exempted from charge to wealth tax then there was nothing to stop it from adding or incorporating the words, "and the sale proceeds or the amount received from encashment thereof" in clause' (9)(iii) of the Second Schedule to the Wealth Tax Act. The Legislature by not using or incorporating the aforesaid words in clause (9)(iii) made it's intention absolutely clear that it' did not intend to provide exemption to the sale proceeds or the amount received by an assessee from encashment of Foreign, Exchange Bearer Certificates. The Appellate Tribunal in allowing exemption to the amount received from encashment of the Foreign Exchange Bearer Certificates had relied upon and taken into consideration uncalled for and extraneous material and the same cannot be upheld.

It was further submitted on behalf of the applicant/department that the case of the respondent/assessee was that the Foreign Exchange Bearer Certificates were purchased from remittances received by him or brought from abroad into Pakistan through normal banking channels and as such it was incumbent upon the respondent to establish that the remittance utilised in acquiring the Foreign Exchange Bearer Certificates was received in or brought into Pakistan through normal banking channels, which the respondent/assessee did not succeed in establishing. It was, therefore, submitted on behalf of the applicant/department that in view of this fact also the respondent/assessee was not entitled to the claim of exemption of the amount of Rs.1,20.000 from charge to wealth tax. The contention advanced by Mr. Shaikh Haider, carried weight and merit consideration.

Upon the above discussions, we are satisfied that this appeal merits consideration and must succeed. Accordingly, we allow this appeal and answer the question in the negative. The impugned order of the Appellate Tribunal is set aside and the order of the Commissioner of the Income Tax Appeals is restored.

C.M:A./94/K(tax)Appeal allowed.