I.T.A. No.3496/LB of 2001, decided on 18th April, 2002. VS I.T.A. No.3496/LB of 2001, decided on 18th April, 2002., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2942 (2002)

(a) Income Tax‑‑‑

‑‑‑‑ Order 'without jurisdiction‑‑‑Cancellation of‑‑‑Where question of jurisdiction of a case was involved and ultimately it was established that the order had been passed without jurisdiction, such order should be cancelled rather than setting aside the same.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss. 5 & 56‑‑‑Jurisdictional order No.K‑160(4)(1)93‑94/2114/J, dated 16/12‑5‑1993‑‑‑Jurisdictional order No.K‑160(I)/1991‑92/1028/J, dated 5‑9‑1990‑‑‑Notice under S. 56 of the Income Tax Ordinance, 1979 was issued by the Assessing Officer and assessment was completed by the Assessing Officer of another circle, while the territorial jurisdiction vested with the Assessing Officer of another Circle (third) ‑‑‑Validity‑‑ Assessee was a house‑wife and was residing in the area which fell under the jurisdiction of the Assessing Officer of the third circle, thus not only assumption of jurisdiction by Assessing Officer of other Circle for issuance of notice but also for the completion of assessment by the other Assessing Officer was void ab initio and illegal because of having no territorial jurisdiction over the case‑‑‑Appellate Tribunal cancelled the order made being made without jurisdiction.

Muhammad Shahid Abbas for Appellant.

Nemo for Respondent.

Date of hearing: 18th April, 2002.

ORDER

RASHEED AHMED SHEIKH (JUDICIAL MEMBER)‑‑‑This appeal at the behest of the assessee‑appellant is directed against the order made by AAC Appeal Range, Lahore dated 23‑7‑2001 in respect of assessment year 1987‑88. Mr. Muhammad Shahid Abbas, Advocate, the learned counsel for the assessee has objected the impugned order on legal as well as on factual grounds.

2. The first objection of the learned counsel for the assessee is relevant to assumption of jurisdiction by the Assessing Officer to finalize the order under section 62 in the present case. Since this plea goes, to the very roots of the assessment, therefore, we take up this legal objection of the assessee at the first place. According to the learned A.R., the assessee‑appellant in the present case is a house‑wife who purchased a Plot measuring 10 marlas bearing No.218‑K in L.C.C.H.S. Lahore for a consideration of Rs.60,000 on 24‑1‑1997 and after constructing a house thereon had started residing therein. As the lady was not an existing assessee, a notice under section 56 was issued by the Assessing Officer Circle‑10 Zone‑A, Lahore, where the assessee's husband was executing his business. In that notice, both the addresses; one of the assessee's husband business premises and the other of the residential premises were cited therein. For the purposes of reference, those addresses are being mentioned hereunder: ‑

NTN 05‑10‑0019

Assessment year 1987‑88

1. Ghazala Irshad C/o Jamica Shores, Cooper Road, Lahore.

2. 218‑K‑L.C.C.H.S., Lahore.

Compliance of the said notice was made by the appellant under protest by filing a return of income declaring "nil" income in order to avoid penalty proceedings. However, the assessment was finalized by the Assessing Officer Circle‑17 Zone‑A, Lahore without adhering to the assessee's protest. Aggrieved by the order of the Assessing Officer the assessee filed appeal before the First Appellate Authority before whom jurisdiction to frame the assessment by the Assessing Officer Circle‑17 was duly contested. Apart from this objection the impugned order was challenged before the First Appellate Authority on other legal grounds as well. With regard to assumption of jurisdiction, the AAC had observed and concluded as under:

The assessment record has been perused which lends support to the contention of the appellant that the assessment order is silent on the point of jurisdiction. The Assessing Officer Circle‑17, Zone‑A, failed to mention how he issued the notice of 56 to a lady how is residing at 218‑K, LCCHS, Lahore whereas the LCCHS falls in the territorial jurisdiction of Circle‑29, Zone‑B, Lahore.

However, the AAC set aside the assessment with certain directions on the ground that since the appellant had failed to comply the notices issued by the Assessing Officer and convey him the exact address of her. This decision has forced the appellant to come up in appeal before the Tribunal.

3. Upon having heard the respective submissions advanced by the learned representatives appearing at the bar and upon having perused the orders passed by the two authorities below as well as the documents furnished before us, we find that not only the Special Officer Circle‑10. Zone‑A, Lahore but also the CIT Circle‑17 Zone‑A, Lahore has acted in' flagrant violation of law while issuing the notice under section 50 of the Income Tax Ordinance, 1979 and completing the assessment in the case of the present assessee because according to the jurisdictional Order No.K‑160(4)(1)93‑94/2114/J, dated 16/12‑5‑1993, territorial jurisdiction to assess this case was vested with the ITO Circle‑29 Zone‑B, Lahore. Whereas as per the jurisdictional order No.K‑160(1)/1991‑92/1028/J, dated 5‑9‑1990 ITO Circle‑17, Zone‑A, Lahore was authorized with the powers to assess any person whose place of business falls under certain areas of wall city and outer part thereof. It is also not at all understandable how come the AAC has set aside the assessment order particularly when she after thorough appraisal of facts came to the conclusion that the ITO Circle‑17 Zone‑A, Lahore had illegally formulated the assessment order. Actually she should have cancelled the assessment order instead of setting aside the same. It is cardinal principle of statute that where a question of jurisdiction of a case is involved and ultimately it is established that the order has been passed without lawful jurisdiction, such order should be cancelled rather than setting aside the same.

4. Perusal of the impugned order also reveals that the AAC has transgressed her powers by directing the Assessing Officer to have close association with the IAC while framing re‑assessment order. This is none of the business of the AAC in directing to do so because this is the Assessing Officer who has to pass the assessment order in the present case and if at all the Assessing Officer comes across with any difficulty he can consult the IAC of his own. We, therefore, hold that these remarks were not warranted on the part of AAC and are expunged as such.

5. As the assessee is a house‑wife and is residing at 218‑K, L.C.C.H.S., Lahore which area falls under the jurisdiction of ITO Circle‑29, Zone‑B, Lahore, thus not only assumption of jurisdiction by the Special Officer Circle‑10 Zone‑A, Lahore, for issuance of notice but also the ALIT Circle‑17, Zone‑A, Lahore for completing the assessment was void ab initio illegal because of having no territorial jurisdiction over this case. We, therefore, feel no hesitation in canceling the order made by the ACIT Circle‑17 Zone‑A, Lahore, in the present case being made without lawful jurisdiction. Consequently, the order of the AAC stands vacated.

6. Since we have disposed of the assessee's appeal on legal ground, therefore, there is no need to dilate upon the other issues raised by the learned counsel for the assessee before us.

7. In the result, the assessee's appeal succeeds.

C.M.A./M.A.K./426/Tax(Trib.)Appeal accepted.