BEFORE SYED NADEEM SAQLAIN, JUDICIAL MEMBER AND MUHAMMAD MUNIR QURESHI, ACCOUNTANT MEMBER VS BEFORE SYED NADEEM SAQLAIN, JUDICIAL MEMBER AND MUHAMMAD MUNIR QURESHI, ACCOUNTANT MEMBER
2002 P T D (Trib.) 272
[Income-tax Appellate Tribunal Pakistan]
Before Syed Nadeem Saqlain, Judicial Member and Muhammad Munir Qureshi, Accountant Member
W. T. As. Nos. 1909/LB to 1914/LB of 1999, decided on /01/.
th
June, 2001. (a) Wealth Tax Act (XV of 1963)---
----S.16(2)---Use of word "shall" in S.16(2) of the Wealth Tax Act, 1963 made the issuance of the notice upon the assessee mandatory.
(b) Wealth Tax Act (XV of 1963)---
----S.16(2)---Notice---Non service of---Effect---Setting aside or cancellation of assessment---No notice under S.16(2) of the Wealth Tax Act, 1963 having been served upon the assessee, which was a mandatory requirement under the law, order setting aside the assessment by the First Appellate Authority was vacated and assessment order of the Assessing Officer was cancelled by the Tribunal.
M. Jamil Khan v. Commissioner of Income-tax/Wealth Tax 1995 PTD 1239 and Commissioner of Income-tax/Wealth Tax v. Fazal ur-Rehman PLD 1964 SC 410 rel.
S. Zafar Shah, F.C.A. for Appellant.
Mrs.Iram Adrian, D.R. for Respondent.
Date of hearing: 16th May, 2001.
ORDER
SYED NADEEM SAQLAIN (JUDICIAL MEMBER).---Titled wealth tax appeals for the assessment years 1993-94 to 1998-99 have been filed by the assessee/appellant against the combined impugned order; dated 27-7-1999 passed by the learned C.I.T.(A), Zone-I, Lahore. Following grounds have been agitated by the assessee/appellant:
(a)That the learned First Appellate Authority has no lawful justification to set aside the assessment order.
(b)That no mandatory notice under section 16(2) of the Wealth Tax Act, 1963 was ever issued before completing the assessment under section 16(3) of the said Act. Illegality committed was incurable.
(c)That movable wealth has been unlawfully assessed applying Rule 8 (3).
(d) That without prejudice to the above grounds, the action of the learned First Appellate Authority is against the proviso to section 23(3) of the Wealth Tax Act, 1963.
(e) That without prejudice to the above grounds, both the officers have wrongly interpreted the word amenities available with the rented out building.
2. Learned counsels for both the parties were. present and have been heard.
3. Briefly stated facts of the case are that it is a case of private limited company deriving income from the lease of its property namely Mehfil Cinema for the years under consideration. The assessments were completed through a consolidated order passed under section 16(3) of the Wealth Tax, 1963 on 3-4-1999 by the D.C.I.T./W.T., Circle 15, Coys Zone-I, Lahore as under:
| Assessment Year | Declared | Assessed | Revenue involved |
| 1993-94 | 650,00 | 21,00,000 | 23,500 |
| 1994-95 | 650,000 | 45,00,000 | 83,500 |
| 1995-96 | 14,75,000 | 45,00,000 | 72,875 |
| 1996-97 | 14,75,000 | 45,00,000 | 55,000 |
| 1997-98 | 23,00,000 | 60,00,000 | 92,500 |
| 1998-99 | 31,25,000 | 60,00,000 | 84,375 |
On appeal, the learned First Appellate Authority set aside case and remanded it back to the Assessing Officer for de novo proceedings. Hence, instant appeals by the assessee.
4. The learned A.R. of the assessee has vehemently argued the case and contended that in the absence of mandatory notice under section 16(2) of the Wealth Tax Act, 1963, the learned First Appellate Authority was not justified to set aside the case and remand it back to the Assessing Officer. In support of his contention, the learned A.R. relied upon a judgment of the Hon'ble Lahore High Court Lahore reported as 1995 PTD 1239 (High Court, Lahore) in re: M. Jamil Khan v. Commissioner of Income-tax/Wealth Tax. He pleaded at bar that the case relied upon by him was on all fours to the assessee's case under appeal. He drew our attention to the relevant paragraph of the supra judgment which is as under:
"It is common ground between the parties that no notice under section 16(2) was issued to the applicant and the Wealth Tax Officer has issued both notices on the same date and had passed the order of assessment according to the law. This being the position, we have no difficulty in coming to the conclusion than proceeding's commencement from the Wealth Tax Officer to Appellate Tribunal were coram non-judice and therefore the orders passed by the Wealth Tax Officer, First Appellate Authority and Tribunal were clearly without any lawful authority and without lawful effect."
He submitted that admittedly in assessee's case, it has been observed by the learned First Appellate Authority that:
"Perusal of the record shows ' that the Assessing Officer has failed to issue a notice under section 16(2) of the Act for any of the six years under appeal."
He emphasized that after observing this fact that no notice under section 16(2) was served upon the assessee, the assessment proceedings framed by the Assessing Officer should have been annulled rather than remanding the case back to the Assessing Officer to give him a chance to fill in the lacunae. Beside, the learned A.R. also tried to argue the case on merit. The learned D.R. on the contrary as controverted the arguments advanced by the learned A.R. and prayed for maintaining the assessment as well as impugned order.
5. After hearing the learned representatives of both the parties and also going through the relevant orders as well as case law cited at bar, we feel ourselves persuaded by the arguments advanced by the learned A.R. Admittedly, in the instant case, no notice under section 16(2) of the Wealth Tax Act, 1963 was issued to the assessee. Plain reading of provision of section 16(2) also shows that the word "shall" has been used, which makes the issuance of the notice upon the assessee mandatory. The supra judgment quoted by the learned A.R. also lends support to the assessee's stance. Obviously, aim of the notice under section 16(2) is to give an opportunity to a person whose return has been found unsatisfactory, In order to reach at a just conclusion, he should know the material upon which he has been charge sheeted and to rebut the context of notice. This principle is well settled and forms foundation of justice in all the civil societies. This is what is called principle of audi alteram partem which means that no body should be condemned unheard. In another judgment reported as PLD 1964 SC 410 in re: Commissioner of Income-tax/Wealth Tax v. Fazal-ur-Rehman it was held by the august Supreme Court of Pakistan that:
"Before considering this submission, we may state that the principle of alteram partem (no man shall be condemned unheard) is a well settled principle. This principle is not confined only to the Court and judicial proceedings, but extend to all proceedings by whomsoever held this .may affect the person of property or other rights of the parties concerned in dispute and the maxim will apply with no less force to proceeding which affect liability to pay a tax or duty. See Commissioner of Income-tax East Pakistan v. Fazalur Rehman (1964) 10 Tax 49 (SC Pak.) = (PLD 1964) SC 410".
6. Since no notice under section 16(2) of the Wealth Tax Act, 1963 was served upon the assessee, which is a mandatory requirement under the law, we are of the considered view the learned First Appellate Authority was not within the ambit of law while setting aside the case and remanding it back to the Assessing Officer. Therefore, we allow the assessee's appeal and vacate the impugned order and cancel the assessment order.
7. Since we have decided the instant appeal on the basis of legal issue, we do not feel it necessary to dilate upon the case on merit.
C.M.A./M.A.K./164/Tax(Trib.) Appeal accepted.