BEFORE MUHAMMAD MUNIR QURESHI, ACCOUNTANT MEMBER AND SYED NADEEM SAQLAIN, JUDICIAL MEMBER VS BEFORE MUHAMMAD MUNIR QURESHI, ACCOUNTANT MEMBER AND SYED NADEEM SAQLAIN, JUDICIAL MEMBER
2002 P T D (Trib.) 168
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Munir Qureshi, Accountant Member and Syed Nadeem Saqlain, Judicial Member
W.T.As. Nos. 1381/LB to 1384/LB of 1996, decided on /01/.
st
June, 2001. (a) Wealth Tax Act (XV of 1963)---
----S.17---Wealth escaping assessment---Limitation---Notice under S.17.(1)(a) of the Wealth Tax Act, 1963 could be issued within a period of 5 years from the close of financial year in question---Notices issued on 31-7-1994 for the assessment years 1986-87, 1987-88 and 1988-89 were hit by limitation as such notices could be issued by 30-6-1992, 30-6-1993 and 30-6-1994 respectively.
(b) Wealth Tax Act (XV of 1963)---
----Ss. 17 & 16(5)---Wealth escaping assessment---Notices under S.17 of the Wealth Tax Act, 1963 were issued calling for returns---Opportunities were given to the assessees to file returns---Non-compliance-- Assessment was finalized under S.16(5) of the Wealth Tax Act, 1963-- Assessee contended that S.16 of the Act governs assessment proceedings only in those cases where returns had been filed under S.14 of the Wealth Tax Act, 1963 and not where the return of net wealth was filed under S.17 of the Wealth Tax Act, 1963---Assessment should have been finalized under S.17 of the Wealth Tax Act, 1963---Validity-- Assessment under Wealth Tax Act, 1963, whether current assessment or arrear assessment, was governed by the provision of S.16 of the Wealth Tax Act, 1963---Section 17 of the Wealth Tax Act, 1963 was relevant only for the purpose of calling of return of net wealth where escapement/ under-assessment or assessment at too low a rate was detected---When provisions of S.17 were invoked, the provisions of Wealth Tax Act, 1963 so far as might, were to be applied as if the notice had been issued under S.14(2) of the Wealth Tax Act, 1963---Assessment of net wealth pursuant to issuance of notice under S.17 was also governed by the provision of S.16 of the Wealth Tax Act, 1963.
(c) Wealth Tax Act (XV of 1963)---
----S.17---Wealth escaping assessment---Definite information---"Any information"--Connotation---Scope--Issuance of notice--Section 17(1)(b) of the Wealth Tax Act, 1963 stipulates that notice under S.17 might be issued in consequence of "any information" in the Assessing Officer's possession indicating that assessee's net wealth chargeable to tax had escaped assessment for any year whether by reason of under-assessment or assessment at too low a rate or otherwise.
Anwar-ul-Haq, D.R. for Appellant.
Sh. Sharif Hussain for Respondent.
Date of hearing: 20th June, 2001.
ORDER
MUHAMMAD MUNIR QURESHI (ACCOUNTANT MEMBER).- These appeals by Revenue are directed against order of the A.A.C., Sahiwal dated 17-4-1996.
2. According to the department, the First Appellate Authority has wrongly annulled the wealth tax assessment order for the assessment years 1986-87 to 1989-90. It is argued that jurisdiction has been correctly exercised under section 17 of the Wealth Tax Act, 1963 and assessments correctly framed under section 16(5) read with section 17 of the Act, Finally, it is contended that even if it be accepted that wrong section has been cited in the order of assessment, that should not be made the basis for annulment as notice under section 17 had been duly issued and jurisdiction properly assumed.
3. Briefly stated, the facts in this case are that the assessee/respondent was found by the W.T.O. to be liable to file wealth Tax Returns that had not been filed 'suo motu'. Notice under section 17 was sent through registered post calling for Returns the assessment years 1986-87 to 1989-90 as service in the ordinary manner could not be made but there was no, compliance. Notices under section 16(4) were then issued and assessee sought adjournments which were allowed. As many as (8) opportunities were given to the assessee to file Returns of Wealth. Finally, because of persistent non-compliance, the W.T.O. finalized the assessments under section 16(5).
4. The assessee filed appeal before the A.A.C. and argued that, firstly, the assessments were "time-barred" and secondly they had been finalized in an illegal manner under section 16(5) when they were statedly required to be finalized under section 17. The A.A.C. after examination of the matter found that the assessments for the charge years 1986-87 to 1989-90 had been illegally framed under section 16(5) of the Wealth Tax Act, 1963 and should have been finalized under section 17. Exercise of jurisdiction under section 16(5) was found to be without statutory sanction and hence assessment orders for 1986-87 to 1989-90 were annulled.
5. According to the A.R. of assessee/respondent, the A.A.C.'s finding on the matter is consistent with law. It is argued that this being the case of "escaped assessment" the provisions of section 17 of the Act were applicable exclusively and it is further argued that section 17 of the Act empowers the W.T.O. to not only call for Return of Net Wealth but also to pass order of assessment. According to the A.R., in cases where notice under section 17 is required to be issued for the reason that net wealth has `escaped assessment' or has been `under assessed' or `assessed at too low rate' etc. then the assessment is also required to be made under section 17 of the Act and not under-section 16. It is the A.R.'s contention that section 16 governs assessment proceedings only in those cases where Return has been filed under section 14 and not where Return of Net Wealth is filed under section 17. The A.R. also argued that the wealth tax assessments for 1986-87 to 1989-90 were time-barred as per limitation of time laid down in section 17A(2)(b). Furthermore, the A.R. contended that there has been no service of statutory notices in this case on the assessee and also that there was no `definite information' available to the Assessing Officer and no approval had been sought from the I. A. C.
6. The D.R. has opposed the arguments made by A.R. of assessee/respondent. According to the D.R., the notices have been duly issued and served through registered post and the Regd. Letter containing the notice was not received back un-served by the Assessing Officer which would have been the case had assessee not been available at the cited premises. The D.R. further pointed out that notice under section 17 of the Wealth Tax Act, 1963 had been correctly issued as per law and because of their non-compliance, the Assessing Officer had no choice but to finalize assessment ex parte under section 16(5) of the Wealth Tax Act. The D.R. insists that section 16(5) has been correctly cited. The D.R. denies that the assessments for 1986-87 to 1989-90 were time-barred.
7. We have heard both sides and available record and we find that, prima facie, the assessments for 1986-87, 1987-88 and 1988-89 are time-barred. However, the assessment for 1989-90 is within time. The limitation for issuance of notice under section 17 for assessment years 1986-87 to 1988-89 will be reckoned w.e.f. close of the financial year in the case of each assessment year (i.e, 30-6-1987 in the case of assessment year 1986-87 and so on for the other assessment years) and notice under section 17 (1)(a) can be issued within a period of 5 years from the close of the financial years in question. Reckoned in this manner, notice under section 17 can be issued by 30-6 -1992 for assessment year 1986-87, by 30-6-1993 for assessment year 1987-88, by 30-6-1994 for assessment year 1988-89 and by 30-6-1995 for assessment year 1989-90. Now the notices under section 17 have been issued on 31-7-1994 and assessments have been finalized in August, 1995. Prima facie, the notices issued under section 17 are hit by limitation so far as assessment years 1986-87, 1987-88 and 1988-89, are concerned However, the notice under section 17 is "in time" so tar as assessment year 1989-90, is concerned (limitation for issue of notice expired on 30-6-1995 while notice was issued on 31-7-1994). Notice having been issued on 31-7-1994 for assessment year 1989-90, assessment was required to be completed within 2 years reckoned from 30-6-1995 i.e. assessment was to be completed by 30-6-1997 and assessment has been completed in August, 1995 so that it is well in time,
8. The assessee's contention that assessment framed under section 16(5) is illegal and could only have been framed under section 17 has been looked into and is found to be completely misconceived. The assessee's A.R. has clearly misinterpreted the relevant provisions of law as assessment under the Wealth Tax Act; 1963, whether current assessment or arrear assessment, is governed by the provisions of section 16. Section 17 of the Act is relevant only for the purpose of calling of Return of Net Wealth where escapement/under assessment or assessment at too low a rate is detected. When provisions of section 17 are invoked the provisions of the Wealth Tax Act shall, so far as may, be applied as if the notice had been issued under sub-section (2) of section 14. This means that order of assessment of net wealth pursuant to issuance of notice under section 17 is also governed by the provisions of section 16. The assessee's A.R. contention that assessment provisions under Wealth Tax Act are specified both in sections 16 and 17 is found to be misconceived and as explained above, the provisions governing assessment are stipulated in section 16 while the provisions governing issuance of notice where wealth has escaped assessment (for whatever. reason) are specified in section 17. It is to be noted that the Head-notes to sections 14, 16 and 17 of the Wealth Tax Act, 1963 also clarify the meaning attached to the provisions contained in these sections. Thus, the Headnote to section 14 is titled "Return of Wealth". Similarly, the Headnote to section 16 is titled "Assessment" and the Headnote to section 17 is titled "Wealth escaping assessment". While it is acknowledged that the meaning attached to statutory provisions is not governed by the Headnote to the provisions of law concerned, nevertheless, it cannot be denied that the Headnote has been put there intentionally and indeed throws light on the meaning attached to the relevant provisions to which the Headnote relates. It is also to be noted that in the entire Wealth Tax Act, 1963, each separate section has only one Headnote. This can be interpreted to mean that each separate section deals with one subject-matter only. Thus, if it were the intention of the legislature to permit both calling of Return of Net Wealth and making of wealth tax assessment by recourse to the provisions contained in section 17 of the Wealth Tax Act, 1963, then section 17 would have had two Head notes viz.: (i) Wealth escaping assessment and (11) Assessment. The fact that this is not so is clarificatory of the Legislature's intention to provide one section of law for a particular subject-matter only. This is the scheme of the Wealth Tax Act, 1963. That being so, we, find that the assessee having failed to comply with the terms of statutory notice issued under section 17, assessment has rightly been made under section 16(5), ex parte which is to be read with section 17. As for issuance and service of notice under section 17, we are satisfied that service made through registered post is in order. We note that adjournments sought by assessee repeatedly have been granted by the Wealth Tax Officer. The `ambient circumstances' thus establish that the assessee was very much aware of the proceedings initiated in his case (including recourse to section 17) and he did appear before the W.T.O. also, in the context of these proceedings. It is further noted that besides notice under section 17, the W.T.O. also issued notice under section 16(4) in which the D.C.W.Ts.' intended valuation of assessee's assets was confronted.
9. The assessee's contention before us that the Assessing Officer had no `definite information' in his possession regarding assessee's Net Wealth has been looked into and is found to be incorrect. Section 17(1)(b) stipulates that notice under section 17 may be issued in consequence of "any information" in the W.T.O's possession indicating that assessee's Net Wealth chargeable to tax had escaped assessment for any year whether by reason of under assessment or assessment at too lower rate or otherwise. It is clear in the case before us that the W.T.O. did have information before him, including information contained in assessee's income-tax assessment record, which is precisely the sort of information that is envisaged in section 17(1)(b).
10. As regards ex parte action taken in assessee's case, we find that as the assessee failed to file Return in response to notice issued under section 17, the W.T.O. was fully justified in finalizing assessment under section 16(5). Looking at the matter in its entirety, we are satisfied that the learned A.A.C. has clearly misinterpreted the provisions of sec tion 17 of the Wealth Tax Act and has wrongly held that assessment for 1986-87 to 1989-90 could only have been made under section 17 and not under section 16(5). Assessments for 1986-87 to 1989-90 have been framed under section 16(5) read with section 17 of the Wealth Tax Act 1963 and this is consistent with statutory stipulation. The annulment ordered by the A.A.C. is thus found to be without any legal sanction. We, therefore, vacate the order of the A.A.C. and reinstate the order of the Assessing Officer for assessment year 1989-90. As for assessment years 1986-87 to 1988-89, these have been held above to be `time- barred' and the A.A.C.'s annulment for these years is maintained.
11. Resultantly, the departmental appeals are disposed of as above.
C.M.A./M.A.K./151/Tax(Trib.)Appeals disposed of.