W.T.As. Nos. 1308/LB to 1311/LB of 1998, decided on 22nd March, 2001 VS W.T.As. Nos. 1308/LB to 1311/LB of 1998, decided on 22nd March, 2001, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2329 (2001)

Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑Ss.18, 14, 15, 16(3) & 17‑‑‑Penalty for concealment‑‑‑Voluntarily filing of Wealth Tax Return‑‑‑Assessment‑‑‑Assessment order did not show the attention of Assessing Officer regarding initiation of penalty proceedings‑‑‑Penalty proceedings were initiated at a later stage by forging the copy of order available in the record whereas at the time of original assessment penalty proceedings were never initiated ‑‑‑Validity‑‑ Order passed under S.16(3) of the Wealth Tax Act, 1963 was silent about the fact the returns were furnished in response to notice under Ss.14(2)/17 of the Wealth Tax Act, 1963 though this had been claimed by the Assessing Officer in the penalty order passed under S.18 of the Wealth Tax Act, 1963‑‑‑Assessment order passed under S.16(3) of the Wealth Tax Act, 1963 also did not show the attention of the Assessing Officer whether the penalty proceedings were being initiated‑‑‑Penalty proceedings as per S.18 of the Wealth Tax Act, 1963, could only be invoked if a ,person failed to furnish return under S.14(1) & (2) or S.17 of the Wealth Tax Act, 1963 whereas in the present case these notices under said provisions were never issued nor entered on the order sheet‑ First Appellate Authority categorically recorded that the Revenue had not been able to controvert and rebut these assertions‑ ‑‑First Appellate Authority after admitting and making observations in favour of the assessee, set aside the case and remanded same back for de novo penalty proceedings but the reason given was not sound‑‑‑First Appellate Authority specifically issued notice to know the 'view‑point of the Department but the Assessing Officer did not attend the office on the fixed date‑‑‑Case, in circumstances, was remanded back so that Revenue could also put forward their view‑point‑‑‑Appellate Tribunal did not. consider it a valid. reason for remanding the case since it was very much evident from the order that the Assessing Officer was given a specific notice but he did not bother to appear ‑‑‑Assessee should not be made to suffer for the lack of interest shown by the Revenue Officials‑‑‑Even otherwise the observation made by the First Appellate Authority did show that the case of the assessee warranted acceptance on merits‑‑ Appeals. were accepted and penalties imposed were deleted by the Tribunal in circumstances.

1989 PTD (Trib.) 1221 and Commissioner. of Income‑tax, Lahore v. Freezit, Lahore and others 1975 PTD 56 ref.

Naeem Shah for Appellant.

Muhammad Aslam Bhatti, D. R. and Shafqat Mehmood Chohan for Respondent.

Date of hearing: 16th December, 2000.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER),‑Titled four appeals for the assessment years 1994‑95, 1995‑96, 1996‑97 and 1997‑98 have been preferred against the combined impugned order, dated 11‑9‑1998 passed by the learned A.A.C. Wealth Tax Appeal Range, Lahore:

2. Briefly stated the facts of the case are that a combined assessment order was passed under section 16(3) of the Wealth Tax Act, 1963 at Rs.10,00,000 for each of the assessment years under consideration. However, subsequently a penalty order under section 18 of the Wealth Tax Act, 1963 was passed and penalties amounting to Rs. 1,69,533, Rs.2,37,552, Rs.1,30,737 and Rs.2,01,553 were imposed respectively for the years under appeal. Feeling aggrieved with the penalty order, the learned assessee approached the learned First Appellate Authority assailing the impugned penalty order. The learned A.A.C. vide an order dated 11‑9‑1998 set aside the assessment framed by the Assessing Officer with the direction that order be passed afresh after detail discussion on the contention raised by the learned counsel. Being dissatisfied with the impugned order the assessee has preferred appeals before us.

3. Both the parties have been heard and relevant orders perused. The learned A.R. has vehemently contested taw impugned finding of the learned A.A.C. with regard to setting aside the case as well as imposition of penalties by, the Assessing Officer. He contends that the Wealth Tax Returns were filed suo motu under section 15 of the Wealth Tax Act, 1963 and this is very much apparent from the returns placed on file that the section has been‑specifically mentioned at the top of the returns. He further argued that no penalty proceedings under section 18 were not initiated at the time of completion of assessments under section 16(3). He further submitted that proceedings under section 18 were initiated at a later stage by forging the copy of order available in the record whereas at the time of original assessment these proceedings were never initiated which fact is very much clear by scrutiny of the order served on the appellant/assessee. It is also submitted that in the assessment order there is no 'mention of commencement of penalty proceedings under section 18 which is necessary for penalty proceedings. It was further asserted that it has never been denied by the Assessing Officer in his assessment order that the returns were never filed under section 15 of the Wealth Tax Act, 1963. It has also been pleaded by the learned A.R. that notices under sections 14(2)/17 were never issued and there is no entry in the entry sheet in this regard. It is further submitted that there is also no mentioning of order in response to notice under sections 14(2) and 17. He was of the view that all these facts indicate that suo motu returns were filed under section 15 of the Wealth Tax Act, 1963. In support of his contention the learned A.R. has relied upon a judgment of the Tribunal reported as 1989 PTD (Trib.) 1221 where it has been held that "the Income Tax Authority has to be satisfied in the course of any proceedings under the Ordinance that a certain wilful default has occurred which attracts penal provisions and that a clear direction in that regard should be duly recorded in the assessment order itself. If that is not done, subsequent issuance of a show‑cause notice under section 116 would not validate or sanctify the imposition of penalty". The learned A.R. has also drawn our attention to the judgment of the Honourable Lahore High Court reported as 1975 PTD 56 in re: Commissioner of Income‑tax, Lahore v. Freezit, Lahore and others which was passed in Wealth Tax case. The relevant paragraph of supra judgment is reproduced as under:‑‑‑

"9.It is an accepted principle as laid down in section 28(1 B), Income‑tax Act, that Income‑tax Officer can initiate action for a penalty only in the course of any proceedings in connection with an assessment under section 23 and not afterwards. Once an assessment is finalized no proceedings can be taken. with regard to a penalty. The action taken by the Income‑tax Officer on 15‑10‑1965 issuing a notice under section 28(3) and on 27‑1‑1967 imposing a penalty against the respondents was bad in law and the Tribunal on the facts and circumstances of the case was justified in holding that penalty proceedings under section 28(1) of the Income‑tax Act could not be initiated and penalty imposed in respect of the year 1964‑65. "

4. The learned D.R. on the contrary has opposed the arguments advanced by the learned A.R.

5. Arguments heard and relevant orders perused. After hearing both the parties, we feel ourselves persuaded by the arguments advanced by the learned A.R. There is no dispute with regard to the assertion made by the learned A.R. Perusal of the record does show that it has been mentioned at the top of the returns that the same are being filed under section 15 of the Wealth Tax Act, 1963. This contention of the A learned A.R. is also supported by the fact that the order passed under section 16(3) is also silent about the fact that the returns were furnished in response to notice under sections 14(2)/ 17 though this has been claimed by the Assessing Officer in his penalty order passed under section 18 of the Wealth Tax. Act, 1963. It is also worth noting that the assessment order passed under section 16(3) of the Act also does not show the attention of the Assessing Officer whether the penalty proceedings are being initiated. It is also worth mentioning that as per section 18 of the Act, penalty proceedings could only be invoked if a person failed to furnish return under subsection (1) or subsection (2) of section 14 or section 17 whereas in this case these notices were never issued nor entered on the order. sheet. Above all the learned First Appellate Authority in his impugned order has recorded categorically that the Revenue has not been able to controvert and rebut these assertions. However, strangely enough after admitting and making observations in favour the assessee, the learned First Appellate Authority set aside the case and remanded it back to the Assessing Officer for de novo penalty proceedings but the reason given by the learned A.A. C. is not a sound reason passed upon legal premises. It has A been observed by the learned A.A.C. that to know the view‑point of the Department a specific notice was given to the Assessing Officer asking him to attend the office but on the fixed date nobody attended the office that why this case was remanded back to the Assessing Officer so that Revenue could also put forward their view‑point. We do not consider it a valid reason for remanding the case since it is very much evident from the impugned order that the Assessing Officer given a specific notice but he did not bother to appear. We are, therefore, of the view that the assessee should not be made to suffer for the lack of interest shown by the Revenue Officials‑even otherwise the observation made by the learned A.A.C. does show that the case of the assessee warrants acceptance on merits.

6. For the foregoing reasons the penalties imposed for all the four years under appeals stand, deleted. The appeals of the assessee succeed accordingly.

C.M.A./M.A.K/347/Tax(Trib) Appeals succeeded.