I.T.As. Nos. 3249/LB to 3254/LB of 2002, decided on 18th May, 2002. VS I.T.As. Nos. 3249/LB to 3254/LB of 2002, decided on 18th May, 2002., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 242 (2002)

Income Tax Ordinance (XXXI of 1979)‑‑‑

--‑‑Ss.154, 59(A)/59(1), 61 & 66‑A‑‑‑Service of notice‑‑‑First Appellate Authority admitted that notice under S.61 of the Income Tax Ordinance, 1979 was not properly served and no reasonable opportunity of hearing was provided to assessee as no receipt of post was available on record to prove that notices had actually been sent through registered post despite the fact that on the office copies of the notices the words "registered post" was written and set aside the assessments‑‑‑Contention of the assessee was that non‑service of statutory notice in a proper manner would entail cancellation of assessment orders rather than setting aside the same by the First Appellate Authority‑‑‑Validity‑‑‑First Appellate Authority was not justified to proceed to set aside the case after observing such flagrant violation of legal provision and holding same to be against the law and he was required to annul the assessment proceedings conducted by the Assessing Officer‑‑‑Since the case had been decided on the legal ground of absence of proper service of notice, Appellate Tribunal did not dilate upon the merits of the case‑‑‑Order passed by the First Appellate Authority was vacated and that of the Assessing Officer were annulled by the Appellate Tribunal‑‑‑Assessing Officer was directed to accept the declared version of the assessee.

1979 PTD (Trib.) 19; NTR 1990 (Trib) 105; 1985 PTD (Trib.) 178 and PLD 1964 SC 410 rel.

Abdul Rasheed Gill for Appellant.

Mrs. Talat Altaf Khan, D.R. for Respondent.

Date of hearing: 8th May, 2002.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER). ‑‑‑Titled six appeals, for the assessment years 1992‑93 to 1997‑98 have been filed at the instance of the assessee against the impugned order dated 1‑6‑2001 passed by the learned CIT (A). The sole ground of the appellant for all the, years under appeal is that the learned CIT(A) was not justified to set aside the ex parte assessment order instead of annulling the same since no proper service of notice under section 61 was made.

The assessee, a lady, derives income from property and stitching. Original assessment in this case for the years under consideration were completed under sections 59(A)/59(1) of the Income Tax Ordinance, 1979 (hereinafter called as Ordinance). Later on assessments were cancelled by the IAC by invoking section 66A. The assessee appeal before the Tribunal was dismissed. The Assessing Officer issued statutory notices under section 61. Finally a notice under section 61 was issued on 5‑5‑2000 for 11‑5‑2000 but no body appeared, hence the Assessing Officer completed assessments for all the year on the same date. The assessee went in appeal before the CIT(A) who vide his order dated 1‑6‑2001 set aside the case with the direction that notice be‑ properly served upon the appellant by providing reasonable opportunity of being heard. Being dissatisfied the impugned order the assessee preferred appeal before us.

We have heard both the parties and perused the record. The learned A.R. of the assessee contended that no proper service of notice was made. It has been submitted that notice for finalization of assessment was issued for 11‑5‑2000, however, the same was received by the assessee on the same date i.e. 11‑5‑2000 at 2.00 p.m. as per written arguments put forth before the learned CIT(A) and this fact was also brought to the notice of the Assessing Officer vide letter dated 11‑5‑2000 received on 13‑5‑2000 (Copy of the same was available on record). The learned A.R. of the assessee submitted that finalization of assessment on 11‑5‑2000 by itself shows that the assessee was not afforded opportunity of being heard and the Assessing Officer seemed to be in a hurry to finalize the assessment on ex parte basis. He further submitted that since, notice was received on 11‑5‑2000 at 2 p.m. meaning thereby that no proper service was done. He further submitted that the learned First Appellate Authority was also not justified to set aside the case and remand it back to the Assessing Officer for de novo proceedings and issuance of fresh notice and proper service. He further contended that non proper service of statutory notice would entail cancellation of assessment orders rather than setting aside by the learned CIT(A). It was also emphasised by the learned A.R. that the learned CIT(A) has himself admitted the fact that proper service has not been done in this case with the following observation:‑

"Examination of the assessment record reveals that notice dated 5‑5‑2000 issued for compliance on 11‑5‑2000 was served through registered post. In the office copy it has been, written `registered post' but no receipt of post office is available on record to prove that notice has actually been sent through registered post. There is no proof of date on which it was actually posted and served upon the appellant. Under the circumstances argument of the appellant that notice was received on 11‑5‑2000 and that reasonable opportunity was not provided cannot be ignored. Since reasonable opportunity was not provided to the appellant the case for the years under reference is set aside with the directions that notices be properly served upon the appellant by providing reasonable opportunity of being heard. Other grounds of appeal need no adjudication."

While taking us through the abovementioned observations made by the learned CIT(A) in his impugned order, the learned A.R. of the assessee submitted that setting aside of the case amounts to giving premium to the revenue and offers opportunity to make up the deficiency which is not permissible under the law. In support of his contention the learned A.R. of the assessee relied upon the judgments of the Tribunal as well as higher Courts reported as 1979 PTD (Trib.) 19 and NTR 1990 (Trib.) 105.

5. We have heard both the parties and perused relevant orders alongwith the law cited at the bar. We find ourselves in full, agreement with the assertions made by the learned A.R. at the bar. In the judgment reported as 1979 PTD (Trib.) 19 it was observed by the Bench that:‑

"In our opinion the appellant rightly contends that instead of annulling the assessments the learned AAC by setting aside the same has simply given undue additional time to the Income Tax Department to finalize the assessment. We agree with the appellant's contention that under the law no one can be permitted to avail of his own wrongs. The service of the notices for all these years having been found by the learned A.A.C. to be void and illegal the assessment framed could not be sustained in law."

The facts of the case which are the subject‑matter for adjudication before us are somewhat identical to the case relied upon by the appellant. The learned CWT (A) has himself admitted that no receipt of post is available on record to prove that notices have actually been sent through registered post despite the fact that on the office copies of the notices the words "registered post" is written. Similarly, the learned First Appellate Authority has taken notice of the fact that no acknowledgement is available in the record to prove that notice has actually been sent through registered post. In such‑like circumstances the learned CIT(A) was justified in holding that proper service in the instant case has not been done. However, we are of the considered view that the learned CIT(A) erred in law while setting‑aside the case after having observed that there is no proof of date on which it was actually posted and served upon the appellant.

In the reported judgment cited as NTR 1990 Trib. 105, the learned Bench was once again seized of the issue that the learned First Appellate Authority after having come to the conclusion that no valid service of notice under section 65 of the Income Tax Ordinance, 1979 was made, whether he could make direction for re‑assessment proceedings, it was held by the Tribunal that "without valid service of notice under section 65, re‑assessment is without lawful authority and liable to be cancelled." It was further held by the Tribunal that once the First Appellate Authority had held that notice under section 65 of the Income Tax Ordinance, 1979 was not properly served, the only course available is to cancel the assessment passed under sections 62/65 of the Ordinance. In another reported judgment of the Tribunal cited as 1985 PTD (Trib.) 178 wherein the ratio decidendi laid down by the august Supreme Court of Pakistan and reported as PLD 1964 SC 410 was followed observing that the failure to comply with the mandatory provision of statute entail annulment of the impugned judgment and not setting aside the case as it was done by the learned First Appellate Authority in the present case. We are at loss to understand that after observing such flagrant violation of legal provision and holding it to be against the law, the learned First Appellate Authority still proceeded to set‑aside the case and did not annul the assessment proceedings conducted by the Assessing Officer as held by the superior Authorities through different judgments. Since the case has been decided on the legal, ground with regard to proper service of notice, we are, not inclined to dilate upon the merits of case.

In the light of arguments advanced by the learned A.R. as well as judgments cited at the bar, we are of the considered view that both the orders passed by the learned lower officers are not sustainable in the eye of law, hence we vacate the impugned order passed by the First Appellate Authority and assessments made for all the years under consideration stand annulled. The Assessing Officer is directed to accept the declared version of the assessee.

Appeals of the assessee succeeded accordingly.

C.M.A./492/Tax(Trib.) Appeals accepted.