W.T.As. Nos. 523/KB to 527/KB of 2001, decided on 10th April, 2002 VS W.T.As. Nos. 523/KB to 527/KB of 2001, decided on 10th April, 2002, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2276 (2002)

Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑Ss.17(1)(b), 16(4)!,5) & 14(2)‑‑‑Wealth escaping assessment Initiation of proceedings under Ss. 14 & 16, Wealth Tax Act, 1963 on complaint without proper issuance of notice under S.17 of the Act ‑ Validity‑‑‑Complaint had been lodged and in consequence of cognizance the Assessing Officer had obtained Bank statements‑‑‑Notice under S.17(1)(b) of the Wealth Tax Act, 1963 was not issued which was legally necessary‑‑‑Assumption of jurisdiction without issuance of specific statutory notice under S.17(1)(b) of the Wealth Tax Act, 1963, had made the assessment under S.16(5) of the Wealth Tax Act, 1963 illegal, invalid and void‑‑‑Assessment was annulled by. the Tribunal with the remarks that if the Department wanted to pursue its proceedings against the assessee/appellant, it would be at liberty to do so but only after issuing proper notices as per law.

I.T.As. Nos. 286, 287 and 288/KB of 2000‑2001 rel.

2002 PTD (Trib.) 168 ref.

A. S. Jafri for Appellant.

Sajjad Ahmed, D.R. for Respondent.

Date of hearing: 12th March, 2002.

ORDER

ABDUL GHAFOOR JUNEJO (ACCOUNTANT MEMBER).‑‑‑--The appellant is aggrieved against a combined order of the learned CIT(A), Hyderabad Zone, Hyderabad, dated 16‑7‑2001 where under for the assessment years 1995‑96 to 1999‑2000 the order,. passed by the ACWT were confirmed by him. These orders impugned before us are challenged both on legal and factual plane. These orders of the authorities below have been perused and the learned representatives of both the parties have been heard at length.

2. The facts so far as relevant for the disposal of these appeals are that the appellant is an Assistant Professor at New Ali Garb College, Tando Adam. Against him a complaint has been received by the Department in which it was. allegedly complained that the appellant has deposited Rs.25,00,000 in Account No. PLS 4257 and in another account availed SNDR's Rs.50,00,000 at Allied Bank Ltd., Tando Adam. These amounts were allegedly deposited from 1st July, 1996 to November, 1997. The Bank statements of his account were obtained by the Department and it was concluded that the assessee had taxable assets under the Wealth Tax Act, 1963. Apart from the above the appellant has other assets consisting of one bungalow and Suzuki car.

3. We have heard Mr A.S. Jafri, Advocate and Mr. Sajjad Ahmed learned representatives of the parties

4. The A.R. of the appellant has also filed additional grounds of appeal which were accepted as per law in which a preliminary objection was raised on the point of law where by the validity of proceeding under section 16(5) has been challenged without prop r issuance of notice under section 17 of the Wealth Tax Act.

5. The A.R. of the appellant has attacked on various grounds. Firstly he has elaborated that the proceedings which were initiated by issuance of notice under section 14(2) of the Wealth Tax, 1963 do not have any legal merit as the issuance of first notice was issued, as per impugned order, dated 28‑1‑2000 as under:‑‑‑

"Hence to enforce the filing of wealth tax return, statutory notice under section 14(2) of the Wealth Tax Act, 1963, issued for making compliance on 28‑1‑2000, but assessee failed to make any compliance by the due date, as such notice under section 16(4) of the Wealth Tax Act, 1963, issued for compliance on 29‑2‑2000. Again no compliance was made by the assessee, fresh notice under section 16(4) of the Wealth Tax Act, 1963, alongwith notice under section 16(3) of the Wealth Tax Act, 1963, issued for compliance on 24‑4‑2000, vide this office Letter No. 1158, dated 14‑4‑2000. "

6. According to the A.R. in absence of statutory notice under section 17(1)(b) the whole proceedings have become null, void and ab initio, and the impugned orders are liable to be cancelled. In support of his contention the A.R. produced a recent judgment which is unreported vide I.T.As. Nos. 286, 287 and 288/KB of 2000‑2001, dated 4‑2‑2002. The learned A.R. stressed on another reported decision vide No. 2002 PTD (Trib.) 168 in which the limitation of issuance of notice under section 17(.1) has been challenged.

7. It was also pointed out by the A.R.. that the said deposits have not come in the period and actually these amounts were deposited from the period 11‑8‑1996 to 19‑10‑1997, therefore, no valuation at the end of the year was required as this was a deposit on the closing date. It was argued that actual amount was only Rs.15,20,000 which was redeposited and this re‑cycle was taken for short term deposits. By elaborating his arguments, the A. R. vehemently urged that the appellant does not have any bungalow or any Suzuki Car and the Assessing Officer has wrongly taken them into the account under the wealth tax net.

8. After prolonged correspondence and series of notices the return of wealth tax was not filed, as such final date of hearing was fixed on 28‑2‑2001, and thus assessment was completed on 14‑4‑2001, for which the A.R. has specifically mentioned that the CIT, Zone Hyderabad had issued general adjournment 'application vide his Letter No.3125, dated 19‑2‑2001 according to which the Advocate Mr. Jafri had gone to Saudi Arabia for performing Haji w.e.f. 20‑2‑2001 to 17‑3‑2001 and all officers are advised not to fix his cases during above period. Such intimation was not considered by, the Assessing Officer and the proceedings were concluded without cognizance of this intimation.

9. After hearing the learned representatives of both the parties we prefer to decide the legal position of this case regarding issuance of proper statutory notices.

10. In this case we have carefully perused the impugned notices issued from time to time and no such notice under section 17(1) has been issued by the officer holding the jurisdiction of this case. In a similar case where no notice of 17(1) has been issued and where this issue has been decided in favour of the assessee in the case vide I.T.A. No.286 of KB 2000‑2001 to I. T. A. No.288/KB of 2000‑2001, dated 4‑2‑2002, in which seven questions have been decided which are relevant and pari materia to the extent of proceedings initiated without issuance of notice under section 17(1). These questions have been decided and reproduced here as under:---

QUESTION NO. 1

wealth the provisions of section 14(2) of the Wealth Tax Act, 1963 are similar to the provisions of section 56 of the Income Tax Ordinance; 1979?

"The irresistible conclusion is that provisions of section 14(2) of the Act are materially different from the provisions of section 56 of the Income Tax Ordinance, 1979."

QUESTION NO.2

Whether can section 14(2) of the Act and section 17 of the Act simultaneously give jurisdiction to the Assessing Officer?

"The irresistible conclusion is that assumption of jurisdiction in different periods of times is subject‑matter of two different provisions of law,. During the relevant financial year proceedings for procuring the return are to be taken under section 14(2) and after end of the assessment year the jurisdiction can be assumed only under section 17. There is no concept of having concurrent/simultaneous jurisdictions under both the provisions of law viz. 14(2) and 17 of the Act."

QUESTION NO.3

Can an‑ assessment proceeding be initiated by issuing notice under section 14(2) beyond the relevant assessment year?

"In this view of the matter it is held that like subsection (2) of section 22 of the repealed Income‑tax Act, 1922 the assessment proceedings cannot be initiated beyond the assessment year by issuing a notice under section 14(2) of the Wealth Tar Act, 1963."

QUESTION NO.4

Whether assuming jurisdiction under a provision other than the legal provision of law is a technical mistake which need not be looked into by the Appellate Court?

"It is, therefore., clear that assuming jurisdiction under other than a legal provision is not a procedural mistake and being fatal to the whole proceedings cannot be ignored by the Appellate Authorities. "

QUESTION NO.5

Can the assessee challenge the jurisdiction after filing the response to an invalid notice?

Though this issue is not relevant in this case which is before us, however, for the sake of ready reference the relevant issue has been decided as under:

"It is also the right of the appellant to be treated in accordance with law without any discrimination. For argument's sake if it is considered that on the basis of submission of his return on receipt of an invalid notice, the proceedings cannot be challenged then this would amount to discrimination against the person who submits return viz. a person who does not submit a return in response to an invalid notice. It is golden principle that no discrimination can be made under the law because all the assessees are to be treated equal.

This has been so provided under Article 4 of the Constitution of Islamic Republic of Pakistan, 1973 and has been so implemented by the superior Courts as held in the following cases:‑‑‑

PLD 1987 Supreme Court of Pakistan 447

PLD 1958 Supreme Court of Pakistan 201

1999 PTD Karachi High Court 4037."

QUESTION NO. 6

Can an order passed without validly assuming jurisdiction stand the test of appeal?

"As has been discussed above even consent of the assessee cannot give jurisdiction to an authority which Mot legally vested with the jurisdiction when there is no jurisdiction or no valid jurisdiction with an authority the orders passed in these circumstances are void and nullity in the eves of law. Waiver even where both the sides had agreed to waive a portion of a statutory provisions, cannot confer jurisdiction which according to statute is not there. In this connection reference can be made to. the cases reported as 1973 (Supl.) India SCR 365 and PLD 1958 (Supreme Court of Pakistan) 201. "

QUESTION NO.7

Is an assessee entitled to call in question the jurisdiction of Wealth Tax Authority after he has made the return of the net wealth, notwithstanding the provision of subsection (10) of the Act?

"The whole superstructure created by the Assessing Officer or subsequently by the learned CIT(A) falls because the basic notice under section 14(2) is illegal, invalid and void. We, therefore, annul the assessment order for the assessment year 1997‑98."

11. In this case a complaint has been lodged and to consequence of this cognizance the Assessing Officer has obtained Bank statements etc. In the light of the above discussion, we find that there is no such issuance of notice under section 17(1)(b) which is legally necessary. Hence we prefer not to dilate upon other issues raised by the A.R. It is therefore. clear that assuming jurisdiction without issuance of specific, statutory 'notice under section 17(1)(b), the whole assessment under section 16(5) of the Wealth Tax Act, 1963. is illegal, invalid and‑void. We, therefore, annul the assessment orders for all the years. If the Department wants to pursue its proceedings` for these years against the appellant, it is at liberty to do so but only after issuing proper, notices afresh as per law.

Consequently all the appeals succeeded as indicated above.

C.M.A./M.A.K./351/Tax(Trib.)Appeals succeeded.