JEHANZEB FATEHJANG VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 23 (2001)

(a) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S.16(2)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Assessment‑‑‑First Appellate Authority declared assessment order as void ‑‑‑Re‑assessment‑‑ Jurisdiction‑‑‑Assessee contended that when an assessment order had been declared void the Assessing Officer had no power to make re assessment and such re‑assessment order be declared void and unlawful‑ Validity ‑‑‑Assessee's argument was based on misconception‑‑‑Order could be declared void where the Authority passing the order had no jurisdiction ab initio and also in cases where having jurisdiction, the Authority commits such illegality in the proceeding which affects its jurisdiction to pass legal order‑‑‑In such cases the Authority passing the order had jurisdiction but due to fatal irregularity like passing order without notice to the party had made the entire proceedings leading to the order as void‑‑‑Authority, in such a situation, passing the order had jurisdiction to re‑hear the case.

(b) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S.16(2) & (4)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Assessment‑‑‑Non‑service of notice‑‑ Assessment order was declared void on the ground that notice under S.16(2) of the Wealth Tax Act, 1963 was not served on the assessee‑‑ Re‑assessment‑‑‑Assessee contended that where an assessment order had been declared void the Assessing Officer had no power to make re assessment and such re‑assessment order be declared void and unlawful‑ Validity‑‑‑Re‑assessment had been made but again notice under S.16(2) of the Wealth Tax Act, 1963 was not served instead, notice under S.16(4) of the Wealth Tax Act, 1963 was issued service of which was denied by the assessee/complainant‑‑‑Both the parties agreed that re assessment order be set aside and fresh assessment be made‑‑‑Such being a reasonable solution particularly as the service of notice was disputed and the complainant had documents in his support to substantiate his case before the Assessing Authority‑‑‑Federal Tax Ombudsman recommended that Commissioner of Income Tax and Wealth Tax to set aside the re assessment order and remand the case to Assessing Officer for fresh assessment and the Assessing Officer shall serve notice under S.16(2) of the Wealth Tax Act, 1963 on the complainant and after giving opportunity of being heard to frame fresh assessment.

Ghulam Sarwar alongwith Jehanzeb for the Complainant.

Malik Muhammad Ashraf, D.C.I.T. for the Department.

DECISION/FINDINGS

The complainant has alleged that the wealth tax assessment for the assessment years 1993‑94 to 1998‑99 was framed by the Deputy Commissioner Wealth Tax, Circle‑41, Fatehjang against which appeal was filed. The Appellate Additional Commissioner by order dated 2‑9‑1999 held that assessment orders were void as no mandatory notice under section 16(2) of the Wealth Tax Act was served on the complainant. It has further been alleged that Deputy Commissioner Wealth Tax, Circle‑41, Fatehjang made re‑assessment under sections 16(5)/23 of Wealth Tax Act which is illegal. According to the complainant where an assessment order been declared void the Deputy Commissioner Wealth Tax has no power to make re‑assessment. It has been prayed that re‑assessment order be declared void and unlawful.

2. The department in compliance with the notice submitted reply that although the assessment order was declared void and no appeal was filed by the department, the re‑assessments were completed in the light of the direction of CIT, Rawalpindi as according to him the judgment of the Supreme Court was wrongly applied by the Appellate Authority. It, was further stated that omission of the Assessing Officer to issue notice under section 16 does not affect jurisdiction conferred on him. The parties have been heard and the record produced by the departmental representative has been perused. From the facts and arguments advanced on behalf of the parties it is clear that the assessment order dated. 30‑6‑1999 was declared void on the ground that notice under section 16(2) of the Wealth Tax Act was not served on the assessee. The arguments of the learned counsel for the complainant is that as the assessment order was declared void the Assessing Authority did not have the jurisdiction to re‑assess is misconceived. The learned counsel has mainly stressed on the meaning of the word `void'. The word `void' means illegal, of no legal effect, unlawful, not‑‑binding and not enforceable. An order is declared void where the authority passing the order has no jurisdiction ab initio. And also in cases where having jurisdiction the authority commits such illegality in the proceeding that affects the jurisdiction to pass a legal order. In such cases the authority passing the order has jurisdiction but due to fatal irregularity like passing order without notice to the party makes the entire proceeding leading to the order as void. In such a situation the authority passing the order has jurisdiction to re‑hear the case. From the record I have observed that for the original assessment not only notice was issued but the assessee's Advocate had appeared before the Assessing Officer. It is strange that this fact was either not brought to the notice of the Appellate Additional Commissioner or it escaped his notice. Furthermore the department also did not file appeal against the said appellate order.

3. The representative for the department pointed out that the re -assessment has been made but again notice under section 16(2) of the Wealth Tax Art was not served instead, notice under section 16(4) was issued service of which is denied by the complainant. In these circumstances both the parties agree that the re‑assessment order be set aside and fresh assessment be made. This is a reasonable solution particularly as the service of notice is disputed and the complainant has documents in his support to substantiate his case before the Assessing Authority.

4. It is, therefore, recommended:‑‑‑

(i) Commissioner of Income Tax and Wealth Tax to set aside the re‑assessment order and remand the case to DCIT for fresh assessment.

(ii) The DCIT shall serve notice under section 16(2) of the Wealth Tax Act on the complainant and after giving opportunity of being heard frame fresh assessment.

(iii) Re‑assessment to be completed within two months of the date of the decision.

C.M.A./475/FTO Order accordingly.