W.T.As. Nos.246(IB) to 255(IB) of 2001-2002, decided on 27th February, 2003. VS W.T.As. Nos.246(IB) to 255(IB) of 2001-2002, decided on 27th February, 2003., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2064 (2003)

Wealth Tax Act (XV of 1963)---

----S. 16---Income Tax Ordinance (XXXI of 1979), S.74(2)--Wealth Tax Rules, 1963, R.8(3)-Assessment---Service of notice---Legal heirs-- Assessee died during the proceedings---Case was represented on behalf of only one of the legal heirs of the deceased assessee through the same Authorized Representative---Assessments were set aside by the First Appellate Authority on the issue that notices must be got served upon all the legal heirs of the assessee for further proceedings---Assessee contended that assessment order was to be annulled instead of setting aside the same as the legal formalities were not fulfilled---Validity-- Legal heir pursing the case was duty bound to have informed his Authorized Representative about the other legal heirs of the assessee for being brought to the notice of the Assessing Officer or to have raised objection during the proceedings that the other legal heirs were not being represented, in the case---Assessing Officer in absence of such information, might have rightly assumed' that there was only one legal heir of the deceased assessee who was being represented through his Authorized Representative---Present case was not of any improper or defective service or non-service---Case of the heir who appeared that he was not properly served or was not served at all because lie pursued the proceedings by representation through Authorized Representative---Case of the assessee at best could be that where the remaining legal heirs of the assessee were not represented in the proceedings and perhaps were not served through any notice to that effect the case was not that of non -service of notice upon the assessee but was one where the assessee originally representing the case died during the proceedings and then the case was represented through only one of the legal heirs and not all the legal heirs of the assessee---Case was not of the nature where the notices were issued to all the legal heirs and they were not served or were improperly served or their service was defective and then an ex parte assessment order was passed---Action taken by the First Appellate Authority was proper in the given circumstances and the same was maintained by the Appellate Tribunal---Appeal was rejected.  

1998 PTD 408; 2002 PTD (Trib.) 272 and 2002 PTD 102 distinguished.

Syed Qalbe Abbas Bukhari for Appellant

Abdul Jaleel D.R. for Respondent.

Date of hearing: 25th February, 2003.

ORDER

SYED MASOOD UL HASSAN SHAH (JUDICIAL) (MEMBER).---The assessee through these appeals, has assailed a combined order, dated 12-10-2001 passed by learned AAC Sargodha, for the assessment years 1990-91 to 1999-2000, whereby he remanded back the case to the Assessing Officer for denovo proceedings with the directions that according to the legal requirements notices must be got served upon all the legal heirs of the assessee for further proceedings. The assessee has raised the following common grounds for all the years under consideration:--

(i) that the order of the WTO was bad in law and against the facts of the case; and

(ii) that the learned AAC was not justified to set aside the case whereas he found that legal formalities were not fulfilled by the then WTO and it was unjustified in the eyes of law and that the order of the WTO was to be annulled instead of setting aside the same.

2. Hence the prayer through these appeals for the annulment of the orders of the AAC and that of the WTO.

3. We have heard the learned representatives of the parties and perused respective orders of the forums below.

4. Briefly the relevant facts for the assessment years 1990-91 to 1994 to 1995 are that the original assessments were finalized by adopting the value of total assets at (i) Rs. 12,70,000 (ii) Rs. 15,00,000, (iii) Rs.16.80.000. (iv) Rs.18.45.000 and (v) Rs.20,50,000 for the said years respectively. Thereafter, the assessee went into the appeals before the first appellate forum and the learned Appeal Commissioner set aside the case for re-framing the assessments in accordance with the provisions of Rule 8(3) of the. Wealth Tax Rules. The Assessing Officer then re processed the assessment and issued statutory notices and AR of the assessee attended and submitted rent deed of thirteen shops which came to Rs.4,450 per month for the said years. The Assessing Officer framed the assessment and took the GALV of 13 shops in accordance with the monthly rent as given in the rent deed at Rs.4,450 by totally bringing the same to Rs.5,46,000 each for the years under consideration. In respect of remaining three shops, as .no rent deed was submitted, the Assessing Officer while seeing to the location and increasing trend in the prices of real estate evaluated the said shops at (i) Rs.4,54,000 (ii) Rs.6,69,000, (iii) Rs.7,34;000 (iv) Rs.9,99,000 and (v) Rs.1154,000 for the said years respectively. In respect of residential house, the Assessing Officer -by keeping in view the increasing trend in the prices of real estate valued the house at (i) Rs.1,50,000, (ii) Rs.1,60;000, (iii) Rs.1,70,000 (iv) Rs.1,80,000 and (v) Rs.2,00,000 for the said years respectively. While accepting the cash as declared and after allowing the amount of statutory exemption, he calculated balance taxable wealth of the assessee at Rs.1,70,000, (ii) Rs.4,00,000, (iii) Rs.5,80,000, (iv) Rs.7,45,000 and Rs.9,10,000 for the said years respectively.

5. In respect of assessment years 1995-96 to 1999-2000 the Assessing Officer through a separate assessment order under section 16(3) of the Wealth Tax Act evaluated the total assets and calculated balance taxable income of the assessee (after allowing the amount of statutory exemption) at Rs.9,75,000, (ii), Rs.11,00,000, (iii), Rs.12,25,000, (iv) Rs.13,50,000 and Rs.15,50,000 for the said years respectively. While making valuation of thirteen shops the Assessing Officer took the monthly rent at Rs.5,130 as given in the rent deed submitted by the assessee and computed GALV of thirteen shops to Rs.6,15,600 each for all the said years. While evaluating three shops, again the Assessing Officer, by keeping in view the location and increasing trend in the prices of real estate and for the absence of rent deed, adopted the value of said shops at Rs.11,29,400 (ii) Rs.12,44,400, (iii) Rs.13,59,400, (iv) Rs.14,74,400 and (v) Rs.16,64,400 for the said years respectively. In making the valuation-of residential house again by the same factors as given in the valuation of shops, the value was adopted at (i) Rs.2,10,000, (ii) Rs.2,20,000 (iii), Rs.2,30,000, (iv), Rs.2,40,000 and (v), Rs.2,50,000 for the said years respectively and then calculated the balance taxable wealth of the assessee as indicated above.

6. Feeling aggrieved with the above treatment in respect of the valuation of properties, the assessee preferred appeals before the first appellate forum on the grounds that the orders made by the WTO were legally defective and he has not fulfilled the legal obligations while making the assessment and as such the whole proceedings being legally defective were to be annulled and that the valuation about the three shops was against the facts as these shops were also on rent basis and as such were to be valued on the basis of GALV like other shops. The learned Appeal Commissioner vide consolidated order (impugned order) for all the years remanded the case to the Assessing Officer, for de, novo proceedings with the directions as indicated above. Now the assessee has come to this Tribunal against the said action of the learned Appeal Commissioner on the grounds enumerated above.

7. The learned AR of the assessee in the course of his arguments has emphasized upon the issue that the service of notice was not effected properly and the learned Appeal Commissioner should have annulled the assessments instead of setting aside the assessments. He contended that the assessee namely Mr. Abdul Majeed expired on 28-5-1998 and the Assessing Officer has served the notice only on one legal heir and not the others as was also obvious from the impugned order. He further contended that it was obligatory upon the Assessing Officer/WTO to have served the notice on all the legal heirs of the assessee. He then explained the chronology of different assessments and the proceedings of the case. He stated that firstly the assessments were framed for the assessment years 1990-91 to 1994-95 and finalized on 17-6-1997 against which the assessee preferred appeals and the learned Appeal Commissioner vide order, dated 24-1998 set aside the case for re assessment. He then stated that the re-assessment was processed and notice was issued and the, assessee expired on 28-5-1998 during proceedings and the re-assessment was finalized on 5-6-2000. HE contended that notice under section 16(4) of the Wealth Tax Act, 1963 (hereinafter, called the Act) for re-assessment proceedings for the said years was issued to the assessee but not to the legal heirs of the assessee as the assessee had since died, In the case of assessments for assessment, years 1995-96 to 1999-2000, the learned AR stated that a separate assessments order under section 16(3) was passed by the Assessing Officer on the same date i.e. 5-6-2000 and no notice was issued to all the legal heirs of the assessee and only one legal heir was served. He contended that the legal requirement for the issuance of statutory notice to all the assessees has not been complied with by the Assessing Officer and the learned Appeal Commissioner has noticed this legal defect in the service of notice but has remanded back the case for de novo proceedings. He contended that the learned Appeal Commissioner should have annulled the assessments instead of remanding the case back to the Assessing Officer. To support his above arguments, the learned AR placed reliance on case-laws reported as (i) 1998 PTD 408, (ii) 2002 PTD (Trib) 272 and (iii) 2002 PTD 102 with specific emphasis to the recent case-law 2002 PTD (Trib) 272 for his contention that improper service and non-service of statutory notice under section 16(2) makes the case of annulment of assessment instead of setting aside the assessment.

8. On the other hand, the learned DR contended that it was not a case of defective or improper or non-service of notice at ail but and it was a case where all the legal heirs of the assessee except one were not served and the learned Appeal Commissioner was right in remanding back the case to the Assessing Officer for service of notice upon all the legal heirs and for further proceedings as per legal requirements. He further contended that firstly the assessee himself through his A.R. had been pursuing his case up to the level of first appellate forum but he died during re-assessment proceeding and the case was then-pursued by his son through the same A.R. He then contended that the case-law relied upon by the learned AR was not applicable to the instant case.

9. We have considered that respective contentions of the parties and have gone through the respective orders of the forums below. At the very outset, we may like to mention here that the case for the assessment years 1990-91 to 1994-95 has taken two rounds to the level of learned Appeal Commissioner. Originally the assessments were finalized on 17-6-1997 and thereafter were re-processed in consequence to the order passed by the learned Appeal Commissioner in the appeals filed by the assessee. During re-assessments proceedings, as was obvious from the re-assessment order. Mr. Q.A. Bukhari, Advocate/learned AR of the assessee attended the proceedings and .the assessment was framed under section 16(3)/23 and there appeared no any objection on behalf of learned AR of the assessee that the notice has not been served upon all the heirs of the asse.ssee who statedly died on 28-5-1998. The said re assessment was finalized on 5-6-2000. Similarly in the assessment order for assessment years 1995-96 to 1999-2000 which has been passed under section 16(3) of the Wealth Tax Act, 1963, it was obvious that Mr. Q.A. Bukhari, Advocate/learned AR of the assessee attended the proceedings and then the assessment was finalized vide order, dated 5-6-2000 but there appeared no any objection on' behalf of the learned A.R. of the assessee attending the proceedings before the Assessing Officer that he is representing only one legal heir of the assessee and the other legal heirs of the assessee have not been served. Thereafter, the matter was agitated in appeal before the first appellate forum and the learned Appeal Commissioner through a combined order, dated 12-10-2001 observed:-

"The perusal of the assessment record reveals that the assessee expired on 28-5-1998 and notice has been got served upon only one legal heir whereas the notice should have been served upon all the legal heirs of the deceased assessee. The case is therefore, remanded back for de novo proceedings with directions that according to the legal requirements notices must be got served upon all the legal heirs of the assessee for further proceedings".

10. From the above observations and findings of the learned Appeal Commissioner, it was obvious that the assessment record revealed that the assessee expired on 28-5-1998 and notice has been got served upon only one legal heir and the notice have not been served upon all the heirs of the assessee. The learned Appeal Commissioner for that reasons remanded back the case to the Assessing Officer with the directions to serve the notice upon all the legal heirs of the assessee as per legal requirements and then make further proceedings of the case. From the above data of the proceedings, it comes out that the assessee during the proceedings of the case relating to the assessments years 1990-91 to 1994-95 expired after the decision of first appeal by the appellate forum which was decided on 27-4-1998 as stated by the learned A.R. Thereafter, the re-assessment proceedings were taken up and the notices in the re-assessment proceedings were issued to the assessee and the case was represented through Mr. Q.A. Bukhari, Advocate/AR of the assessee. Similarly, the same learned AR of the assessee (Mr. Q.A. Bukhari, Advocate) represented on behalf of the assessee and attended the proceedings of assessment for the assessment years 1995-96 to 1999-2000 before the Assessing Officer. Perhaps, during both these proceedings of assessment year 1990-91 to 1994-95 (re-assessment proceedings) and of assessment years 1995-96 to 1999-2000 (original assessment proceedings), the assessee expired and the case was represented on behalf of only one of the legal heirs of the deceased assessee through Mr. Q.A. Bukhari, Advocate/AR. The assessment order of assessment years 1990-91 to 1994-95 and the original assessment order for the assessment years 1995-96 to 1999-2000 have been passed on the same date i.e. 5-6-2000. In this case, obviously the assessee expired during the continuation of the proceedings who had been originally himself pursuing the case relating to the assessment years 1990-91 to 1994-95 and preferred appeals also against the original assessment order of the said years before the first appellate forum wherein the assessment was set aside for reassessment. During the reassessment proceedings of the assessment years 1990-91 to 1994-95 and the original assessment proceedings for the assessment years 1995-96 to 1999-2000, the case was attended by Mr. Q.A. Bukhari, Advocate as AR of the assessee statedly representing one of the legal heirs of the assessee. As the assessee expired during the continuation of the proceedings who firstly himself was pursuing the case and then the case was represented through AR on behalf of only one of the legal heirs of the deceased assessee, therefore, it was the duty of the legal heir pursuing the case that he should have informed his AR about the other legal heirs of the assessee for being brought to the notice of the Assessing Officer or to have raised objection during the proceedings that the other legal heirs were not being represented in the case. The Assessing Officer, in the absence of any such information, may have rightly assumed that there is only legal heir of the deceased assessee who is being represented through his AR who is an Advocate. Moreover, in the appeals before the first appellate forum, against the case was represented through Mr. Q.A. Bukhari, Advocate/learned AR of the assessee. Therefore, it is not a case of any improper or defective service or non-service. The heir of the deceased assessee who represented the case was not saying that he, was not properly served or was not served at all because he pursued the proceedings by representation through his AR. It can at best be a case where the remaining legal heirs of the assessee were not represented in the proceedings and perhaps were not served through any notice to that effect. It was not a situation of non-service of notice upon the assesse but a situation where the assessee originally of representing the case died during the proceedings and then the case, was represented through only one of the legal heirs and not all the legal heirs of the assessee. It is not a case where the notices were issued for all the legal heirs and they were riot served or improperly served or their service was defective and then an ex parte assessment order was passed. In this case, the original assessee was represented through his AR till the stage of the first appellate forum in the case of proceedings relating to assessment years 1990-91 to 1994-95 and first appeal was statedly decided on 27-4-1998. The assessee expired on 28-5-1998. In the re assessment proceedings in consequence to the first appellate order for the assessment years 1990-91 to 1994-95, the same learned AR Mr. Q.A. Bukhari, Advocate as was obvious from the re-assessment order, dated 5-6-2000 represented the case on behalf of the assessee. Similarly, in the assessment proceedings for the assessment years 1994-95 to 1999-2000, again the same learned AR (Mr. Q.A. Bukhari, Advocate) attended the case on behalf of the assessee. At this juncture, we may like to refer here the provisions of subsection (2) of section 74 of the then Income Tax Ordinance, 1979 which relate to the liability in the case of a. deceased person for the purpose of making an assessment of the income of the deceased and recovery of tax. In this context, the proceedings shall be taken to be continued proceedings in the event of death of the assessee. Moreover, even the appeals filed before the Tribunal have been represented through the same learned AR (Mr. Q.A. Bukhari, Advocate) and the appellant namely Mr. Manzoor Ahmad is stated to be the son of the deceased assessee. All these facts clearly distinguish this case from the facts of the cases relied ppon by the learned A.R. of the assessee. Therefore, the ratio of the cases relied upon was not applicable to the case in hand being on different facts and circumstances than that of the said cases. In the case of 2002 PTD 102, the matter was pertaining to the service of a jurisdictional notice under section 28 of the Sales Tax Act, 1951, for acquiring jurisdiction by the Assessing Officer, as to have been properly served upon the assessee or not. In the case cited as. 1998-PTD 408, the Tribunal was seized of the case wherein, the assessments were framed against a dead person/assessee and issue was regarding service of notice upon the legal heirs of the assessee whereas the facts of the case in hand are not of any assessment having been framed against a dead person as was obvious from the chronology of facts given above: In the case i.e. 2002 PTD (Trib.) 272 which is a recent case relied upon by the learned AR more emphatically, the facts again are different from the facts of the case in hand. In that case, no notice under section 16(2) was at all served upon the assessee and hence the Tribunal vacated the order of the First Appellate Authority of (setting aside the case and remanding it back to the Assessing Officer) and cancelled the assessment order. Here again, the facts of the case in hand as per events given above in detail are distinguishable. Therefore, we are of the considered opinion that the ratio of cases relied upon by the learned AR being on different facts and circumstances being distinguishable from the facts and circumstances of the instant case was not applicable to the proposition in hand. Therefore, the action taken by the learned Appeal Commissioner appeared to be proper in the given circumstances of the case and calling for no exception to be taken by us.

11. Accordingly, we maintain the impugned order.

12. Consequently, the assessee's appeals are rejected.

C.M.A./788/Tax (Trib.) Appeal rejected.