(a) Finance Act (XII of 1991)---

----S. 12(2) & (12)---Wealth Tax Act (XV of 1963), S.2(10)---Corporate Assets Tax---Non-filing of return ---Assessment---Jurisdiction-- Assessment was finalized by the Panel rather than Deputy Commissioner---Validity---Section 12(12) of the Finance Act, 1991 caters for definition of different words including the words `Deputy Commissioner' which provides "Deputy Commissioner has the same meaning as in the Wealth Tax Act, 1963" which brings to the definition provided in Wealth Tax Act, 1963---Section 2(10) of the Wealth Tax Act, 1963 states that Deputy Commissioner means a person appointed to act as a Deputy Commissioner of Wealth Tax, a Wealth Tax Officer, a Special Officer and a Tax Recovery Officer---Definition of Deputy Commissioner does not include or even refers to the word Panel-- Jurisdiction assigned to the Income Tax Panel was with regard to income tax cases---Assessment framed by the Panel was without jurisdiction and void ab initio.

(b) Finance Act (XII of 1991)---

----S. 12(2)---Wealth Tax Act (XV of 1963), S. 17-A---Income Tax Ordinance (XXXI of 1979), S.156---Corporate Assets Tax ---Limitation- Assessment---Last date for filing of return was 30-6-1992 while the department issued show-cause notice directing the assessee to file return on 24-11-2001---Validity---Mistake committed by the department could be rectified under S. 156 of the Income Tax Ordinance, 1979 within four years---Assessment framed being time-barred was cancelled by the Appellate Tribunal being without jurisdiction as well as time-barred.

I.T.A. No. 1872/LB of 1997 rel.

I.T.A. No. 1338/LB of 2000 and W.T.A. No.2175/LB of 2000 ref

Ch. Anwar-ul-Haq for Appellant.

Abdul Rasheed D.R. for Respondent.

Date of hearing: 18th September, 2003

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER).-- Through the titled appeal relating to the assessment year, 1992-93, the assessee/appellant has come up in appeal assailing the impugned order, dated 27-2-2003 passed by the learned CWT(A) Zone III, Lahore. The appellant has contested the impugned findings on the basis of lack of jurisdiction by the Assessing Authority as well as the impugned assessment being hit by limitation.

2. The facts in brief are that no suo motu return was filed in terms of section 12(2) of the Finance Act, 1991 in spite of the fact that company had assets on which Corporate Assets Tax was leviable, the Assessing Authority which consisted of a Panel issued show-cause notice, dated 24-11-2000 which is as under:---

"Perusal of your assessment record reveals that as per balance sheet as on 30-9-1991 you had fixed assets amounting to Rs.326,830,000 and Capital Work in progress at Rs.418,168,000. Since you have had fixed assets more than Rs.250 million as such you were liable to file return Corporate Assets Tax under Corporate Assets Tax Law. It was under legal obligation to file the Corporate Assets Tax Return by 31-12-1991 as required under section 12(4) of the Corporate Assets Tax Law. On scrutiny of assessment record it has been noticed that you have not filed the aforesaid return.

You are, therefore, requested to please intimate by 30-11-2001 whether you have filed the Corporate Assets Tax Return or not?

Please note that in case of failure action as per law will be taken which includes Corporate Assets Tax, Additional Tax and Penalty for not filing the return of Corporate Assets Tax on the due date."

In response to the above mentioned notice, the assessee submitted reply vide letter No. T/GHI/Tax/478, dated 22-1-2002 in the following manner:--

"Since 1990, we are existing assessee of the Income Tax Department and since then we have not been intimated any such liability is payable by us. However, we are regularly paying our all taxes to the Govt."

3. The Panel feeling dissatisfied with the reply tendered by the assessee proceeded to levy Corporate Assets Tax for the reason that neither the assessee filed return under the CAT and, nor paid tax in respect thereof. Feeling dissatisfied by the impugned assessment, the assessee approached the learned First Appellate Authority who vide its order, dated 27-2-2003 confirmed the treatment method out to the assessee on the basis of two judgments of the Tribunal passed in I.T.A No. 1872/LB of 1997 and, I.T.A. No. 1338/LB of 2000, the assessee is in further appeal before the Tribunal assailing the same.

4. Ch. Anwar-ul-Haq, Advocate appeared on behalf of the assessee whereas Mr. Abdul Rasheed, D.R. represented the Revenue. Both of them were heard.

5. The learned AR has vehemently argued and submitted that firstly the assessing Authority/Panel had no jurisdiction to frame the assessment and, secondly even if the Assessing Authority had the jurisdiction to frame the assessment, it was hit by imitation being time barred. He argued that under the Finance Act, 1991 the power levying CAT vests with the DCIT and none else. In this regard he took us to the various sections/subsections of the Finance Act, 1991 where the authority which has been named to exercise this power is Deputy Commissioner I.T. He has further pointed out that even after amendment in Finance Act, 1993 the word W.T.O was substituted the word Deputy Commissioner. He contended that assessment which subject-matter of present appeal was framed by a panel including DCIT being member and learned I.A.C. being Chairman of the Panel. Further stated that the Panel could not be equated with the word Deputy Commissioner. He clarified that the department was under misconception that jurisdiction over the wealth tax case/CAT could exercised by the Income Tax Panel who have been entrusted with jurisdiction over income tax cases. In this respect he placed on file notification issued by the Commissioner Special Zone Lahore bearing No. J-1/0I, dated 8-7-2000 showing that Income Tax Panel were vested with the power, in order to frame assessments over the area jurisdiction for the purposes of framing assessments He highlighted his notification does not refer to wealth tax case. He further referred another notification bearing No. J-1/2002, dated 8-7-2000 explaining that Deputy Commissioner of Income Tax/Wealth Tax were assigned jurisdiction relating to the cases of the Directors of such companies whose jurisdiction has been assigned to the Panels of that area. He elaborated that none of the legal provisions including Wealth Tax Act/Corporate Assets Tax or the above notification issued by the department authorize to the Income Tax Panel to levy tax with regard to CAT cases. He submitted that as per provisions enshrined in the Finance Act, 1991, it is only the DCIT who has been authorized to exercise power of levying CAT.

6. Coming to the second limb of arguments, the learned A.R. averred that though no time frame has been given in the Finance Act, 1991 for levying CAT but that does not mean that the department has been given unlimited time for levying tax whenever it desires. He stated that last date for filing the alleged return under section 12(2) of the Finance Act was 30-6-1992 while the department issued show-cause notice directing the assessee to file return on 24-11-2001, i.e., after more than nine years. The learned A.R. contended that CAT is governed by Wealth Tax Act, hence provisions with regard to limitation provided under the Act would govern time limit for levying the CAT. He stated that section 17(1), a, b, c, provided time limit of 4/5 years from the end of the assessment year in question. He argued that similarly the Tribunal and the other higher legal forums have laid down that where no time limit has been provided for, the reasonable time would be considered to be four years on the basis of period provided under section 156 of the Income Tax Ordinance, 1979. In support of his contention the learned AR referred to the unreported judgment of the Tribunal passed in W.T.A. No. 73/LB of 2001, I.T.A. No. 1872/LB of 1997 and W.T.A. No 2175/LB of 2000 Conversely, the learned DR has pleaded for maintaining the impugned assessment framed by the panel as well as the impugned order passed by the learned CIT(A) whereby he confirmed the original assessment levying CAT.

7. After hearing the learned representatives for both the parties and having gone through the relevant orders, we feel ourselves persuaded by the argument advanced by the learned A.R. Admittedly, the assessment in the instant case was framed by the Panel headed by the IAC while the DCIT was represented merely as a member of the said Panel. Perusal of section 12 of the Finance Act, 1991 evinces that the word Deputy Commissioner has been used in section(s) 3, 4, 6 and 7. Similarly section 12(12) which caters for definition of different words including the word Deputy Commissioner provides "Deputy Commissioner as the same meaning as in the Wealth Tax Act, 1963". This brings us to the definition provided in Wealth Tax Act. Section 2 of subsection 10 states that the Deputy Commissioner means a person appointed to act as the Deputy Commissioner of Wealth Tax, a W.T.O., a Special Officer, and a, Tax Recovery Officer. Undoubtedly the above narrated definition or Deputy Commissioner does not include or even refers to the word panel. Even otherwise the jurisdiction assigned to the Income Tax Panel was with regard to Income tax cases. This fact stands substantiated by the two notifications placed on record by the learned A.R. for the assessee. Resultantly we have no hesitation in holding that the assessment framed by the Panel was without jurisdiction and hence void ab initio.

8. As regards the contention of the assessee that the assessment framed in question was time-barred, we are also in full agreement with the learned AR on this issue as well. The last date of filing the return under section 12(2) of the Finance Act in the present case was 30-6-1992 while the department initiated proceedings by issuing show-cause notice to file return on 24-11-2001. It has been held time and again by the Judicial Forums at all levels that a mistake committed by the department could be rectified under section 156. within four years. This issue also came up for adjudication before the Tribunal where almost in identical situation, the Tribunal followed a judgment delivered in W.T.A. Nd.73/LB of 2001 (assessment year 1991-92) wherein. it was held:--

"Admittedly, in the instant case the notice with regard to imposition of CAT was' issued on 29-8-1998 while the order in respect thereof was passed on 30-9-1998. There is no denying the fact that assessment year which was subject-matter of levying of CAT rejected to assessment year 1991-92. It is also worth-noting that following the ratio settled in the supra judgment of the Tribunal, the time limit for completion of assessment in such-like cases in the case of non-filing of return is within four yeas of the end of assessment year. in which in the CAT was firstly assessable. In the case before us the period of four years ended on 30-6-1996. Obviously since the four years period prescribed for filing of return having been elapsed issuance of any subsequent notice of tax or initiation of any proceeding was void ab initio being time-barred.

Following the ratio settled in the (supra) judgment, we are constrained to observe that the assessment in the instant case was also time-barred.

9. Since we have decided both the issues in favour of the assessee/appellant, we vacate the impugned order passed by the learned CWT(A) and cancel the assessment framed by the Panel being without jurisdiction as well as time-barred.

10. The appeal filed by the assessee is allowed accordingly.

C.M.A./23/Tax(Trib)Appeal allowed