W.T.As. Nos. 72/KB and 73/KB of 2003, decided on 4th December, 2003. VS W.T.As. Nos. 72/KB and 73/KB of 2003, decided on 4th December, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1699 (2003)

(a) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑Ss. 31‑B & 14-A‑‑‑Income Tax Ordinance (XXXI of 1979), Ss. 88 & 54‑‑‑Additional wealth tax‑‑‑Comparison of S.31‑B of Wealth Tax Act, 1963 and S.88 of Income Tax Ordinance, 1979 shows that S.88 of the Income Tax Ordinance, 1979 provides for charge of additional tax only where no tax had been paid under S.54 of the Income Tax Ordinance, 1979 or tax paid is short of tax payable under S.54 of the Income Tax Ordinance, 1979‑‑‑Section 31‑B of Wealth Tax Act, 1963 provides that if the tax paid under S. 14‑A is less than 80 per cent of the tax payable as a result of assessment under S.16 of the Wealth Tax Act, 1963, additional tax at the rate of 15 % shall be charged from the due date on which tax was payable under S.14‑A of the Wealth Tax Act, 1963, that was the date on which it was payable on the basis of wealth tax return, to the date of completion of assessment under S.16 of the Wealth Tax Act, 1963‑‑‑Section 31‑B of the Wealth Tax Act, 1963 has wider scope.

2002 PTD 388 distinguished.

(b) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 31‑B‑‑‑Income Tax Ordinance (XXXI of 1979), S. 88‑‑‑Additional wealth tax‑‑‑Distinction between provisions of S.31‑B of Wealth Tax Act, 1963'and provisions of S.88 of the Income Tax Ordinance, 1979‑‑ Provisions of S.31‑B of Wealth Tax Act, 1963 were not exactly the same as those of S.88 of the Income Tax Ordinance, 1979‑‑‑Section 31‑B of the Wealth Tax Act, 1963 had wider scope and there was no provision of charge of additional tax under S.88 of the Income Tax Ordinance, 1979 on the basis of assessed income‑‑‑Section 31‑B(1)(b) of the Wealth Tax Act, 1963 clearly provided that if tax paid on the basis of return filed by the assessee was short by 80% of the tax assessed under S.16 of the Wealth Tax Act, 1963, the assessee would liable to additional wealth tax at the rate of 15% per annum for the number of days of default.

(c) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 31‑B (1)(b)(ii)‑‑‑Additional wealth tax‑‑Enhancement of value of jewellry‑‑‑Charge of additional tax on the amount of tax payable on assessed wealth ‑‑‑Assessee contended that additional tax be levied on the amount not paid on the basis of return but in no way additional tax under S.31‑B of the Wealth Tax Act, 1963 could be charged on the basis of assessed wealth‑‑‑Validity‑‑‑Order of Assessing Officer in charging additional tax under S.31‑B (1)(b)(ii) of Wealth Tax Act, 1963 was legal‑‑‑First Appellate Authority having set aside the issue of valuation of jewellry, it was in the interest of justice if at the time' of computation of taxable wealth and tax payable thereon as a result of assessment under S.16 of the Wealth Tax Act, 1963, for the purpose of charge of additional tax under S.31‑B(1)(b)(ii) of Wealth Tax Act, 1963, the value of jewellry was excluded‑‑‑Assessing Officer was directed to re‑compute additional tax charged by him under S.31‑B(1)(b)(ii) of Wealth Tax Act, 1963 by excluding the value of jewellry from the total wealth assessed under S.23/16(2) of the Wealth Tax Act, 1963‑‑‑Order of First Appellate Authority was modified accordingly by the Appellate Tribunal.

2000 PTD (Trib.) 1169; 1998 PTD 3900; (2002) 85 Tax (SC Pak.) and 2002 PTD (Trib.) 2355 ref.

Rehan Hasan Naqvi, A.R. and Ms. Lubna Pervez, A.R. for Appellant.

Ghulam Shabbir Memon, D.R. for Respondent.

Date of hearing: 4^th December, 2003.

ORDER

AGHA KAFEEL BARIK (ACCOUNTANT MEMBER).----‑‑‑These two appeals have been filed by the assessee, an individual against levy of additional tax under section 31B(1)(b)(ii) of the Wealth Tax Act, 1963 on the following ground:

Ground for Assessment Year 1999‑2000:‑‑

(2) That the learned CIT(A) Zone‑III, Karachi was not justified in confirming the additional tax of Rs.1,50,188 charged under section 31‑B(1)(a) of Wealth Tax Act, 1963. The additional tax confirmed besides being unjustified is excessive and exorbitant."

The grounds of appeal for assessment year 2000‑2001 are the same except figures of additional tax which is Rs.108,480 for 2000‑2001.

2. The facts of the case are as under:‑‑‑

(i)That the assessee had filed wealth tax returns for the assessment years, 1999‑2000 and 2000‑2001, wherein besides other assets, he also declared jewellry, the value of which was enhanced by the DCIT. Both the assessments were set aside by the learned CIT(A) on the issue of valuation of jewellry. However, in the novo assessments passed under sections 23/16(2), dated 30‑1‑2002, the DCWT again made the valuation of jewellry as per original assessment order. This issue has again been set aside by the learned CIT(A) vide his impugned order, dated 31‑3‑2003 for de novo proceedings with the direction to readjudicate the matter and to incorporate the reasons and basis of valuation.

(ii)The assessee had also declared shares of some listed companies in his wealth tax returns for both the years, and had claimed exemption from wealth tax on the basis of the decision of the Tribunal reported as 2000 PTD (Trib.) 1169 which was confirmed by the Honourable High Court vide this judgment reported as 1998 PTD 3900. However its judgment was set aside by the Honourable Supreme Court of Pakistan vide this judgment reported as (2002) 85 Tax (S.C. Pak.) in C.P. No. 2114‑L of 1998 and C.P. No. 1132‑L of 1999. Accordingly, the exemption claimed by the assessee on these shares, was disallowed by the Assessing Officer. who vide his de novo assessments passed under section 16(2)/23, dated 30‑12‑2002 has taken the value of shares as per original order passed under section 16(2) in view of the judgment of the Honourable Supreme Court of Pakistan. Since the issue had been decided by the apex Court by that time, the assessee did not challenge it in appeal before the CIT(A), where appeals were filed on various other issues particularly value of jewellry which was set aside by the learned CIT(A).

3. Thus from the facts of the case it is obvious that the taxable wealth as declared by the assessee was much less as compared to the assessed value of assets and tax payable thereon. However, subsequent to de novo assessments under section 23/16(2), dated 30‑12‑2002, the learned CIT(A) set aside the issue of value of jewellry. Still the assessed wealth . and tax payable thereon excluding the value of jewellry, is much more than the declared taxable wealth due to the reason that the value of shares has been included by the DCIT and no exemption has been allowed thereon. Apparently the tax payable under section 14‑A on the basis of declared wealth is much less than the tax payable on the basis of assessed wealth, under section 16, even excluding the value of jewellry which is set aside by the learned CIT(A). The DCWT has charged additional tax under the provisions of section 31‑B(i)(b)(ii) of Wealth Tax Act, 1963 at the rate of 15% for the number of days of default which have been calculated from the date of filing of wealth tax returns, which is also the date of payment of tax under section 14‑A, to the date of assessment under section 16.

4. The learned CIT(A) has dismissed the appeals of the assessee with his findings as under:‑‑

"Having carefully perused the grounds of appeal, written arguments and the impugned assessment orders, I am of the opinion that the Assessing Officer was justified in charging additional tax under section 31‑B(1)(b)(ii) in view of the following 'ratio of decision of learned ITAT reported as 2002 PTD (Trib.) 2355 which is reproduced in the body of the assessment order as under:‑‑

"Section 88.‑‑Whether Income Tax Officer in case of assessee's failure to make payment of due tax under Income Tax Ordinance will have to charge additional tax although demand of tax has been stayed by the Income‑tax Authorities, therefore, charge of additional tax under section 88 is not discretionary, but compulsory‑‑‑Held Yes."

In view of above, I have no reason to interfere, charging of additional tax under section 31‑B(1)(b)(ii) charged by the Assessing Officer in both the impugned orders are hereby upheld."

5. The learned counsel for the appellant argued that the DCIT has wrongly charged additional tax for. alleged default of short payment of tax payable under section 14‑A, of Wealth Tax Act, 1963, as according to him the assessee had fully discharged his admitted tax liability under section 14‑A, computed on the basis of total taxable wealth declared by him in his return. He argued that the order of the DCIT is incorrect as he has charged additional tax on the basis of assessed wealth and tax payable thereon. He further argued that section 31‑B Wealth Tax Act, 1963 is para materia with section 88 of Income Tax Ordinance, 1979 and provides that if there is any default of section 14‑A that is for non payment or short payment of tax on the basis of return, additional tax be levied at the rate of 15 % per annum on the amount not paid. But in no way the additional tax under section 31B can be charged on the basis of assessed wealth, he argued.

6. The learned A.R. cited a decision of the Honourable Karachi High Court reported as 2002 PTD Tax 388 decided on 18‑9‑2001 in support of his contention. In this judgment the Honourable High Court held that additional tax under section 88 of Income Tax Ordinance, 1979 can be levied only if the assessee was in default of section 54 i.e. tax payable on the basis of return filed and not on the basis of tax assessed. Relevant part of the judgment is reproduced below:‑‑

"We are not persuaded to agree with the submission of learned counsel for the Revenue that although no tax was payable on the basis of return filed by the respondent on account of exemption claimed, but on rejection of claim of exemption by the Assessing Officer, and upholding of the said finding by the First Appellate Authority and ITAT the tax became payable on the basis of such return. It appears that the learned counsel has lost sight of the fact that there is a marked distinction which is very obvious too, in the liability to pay tax on the basis of return filed by an assessee and in the payment of tax on the basis of assessment made by the Assessing Officer. Although, an Assessing Officer, makes on assessment order, initially on the basis of information contained in the return of income and in the Annexures appended with the return of income, as well as on the basis of material collected daring the assessment proceedings, but there is a clear‑cut distinction between the tax payable on the basis of return and the tax payable on the basis of assessment order. The former denotes an admitted tax liability and the latter is based on the assessed tax liability. Admitted tax liability and the assessed tax liability other than tax liability can never be similar or same. Though in certain cases the admitted tax liability and the assessed tax liability can be same, where the declared version is accepted. We, therefore, do not find any substance in the contention raised on behalf of department that with the rejection of exemption claimed and holding that the tax was payable on account of assessment order, the assessed tax liability takes colour of admitted tax liability on the basis of return. If the contention of the learned counsel for the department is accepted then every assessment based on rejection of an exemption shall become an admitted tax liability thereby depriving an assessee from filing an appeal under section 129 and further taking away right of second appeal before the ITAT and appeal/reference before High Court, for the reason that an assessee can file appeal under section 129, if he objects to an order made by the DCIT and no appeal is provided in law against admitted tax liability or tax liability on the basis of return itself. The argument is fallacious and nude of any logic. It militates against the clear provision contained in section 54 and section 129 of the Income Tax Ordinance. It is devoid of all force and is against the very basic principles of the interpretation of statutes and the principles of taxation which provide that the plain words and patent meanings of law are to be applied and interpreted as they are, and no latent meanings are to be attached to the patent words which convey the plain and obvious meaning. The contention ignores another principles that the addition to the application of plain meanings of the words used in a statute, a document is to be read as a whole and not in piece or in conjunction with any other material which is not the part of a document. Thus the words, "tax payable on the basis of such return" are to be interpreted on a reading of return of total income as a whole including the claim of exemption if any, and the assessment order is not to be read as part of return of total income under any principle of the interpretation of statutes.

For the foregoing reasons, we are of the opinion that the Tribunal has very rightly held that on account of exemption claimed by the respondent and notwithstanding, the rejection of claim by the Assessing Officer, First Appellate Authority and the ITAT there was no tax payable on the basis of return and consequently there was no failure on the part of the respondent to pay tax under section 54 and that no additional tax was chargeable under section 88. The impugned findings of the Tribunal is based on proper appreciation of the law and sound principles of the interpretation of statute and is not open to any exception."

7.The learned D.R. supported the orders of the officers below.

8. Before arriving at some conclusion, it is necessary to understand the relevant provisions of law in this case. Section 14‑A which is para materia with section 54 of Income Tax Ordinance, 1979, provides that an assessee shall pay tax on the basis of his wealth tax return on or before the due date of such return. For the sake of convenience section 14‑A of Wealth Tax Act, 1963 is reproduced below:‑‑

"14A Payment of tax on the basis of return.‑‑‑Every person who is required under this Act to furnish a return of wealth shall pay the tax payable, on the basis of such return, on or before the date on which he is so required to furnish such return:

Provided that where such person has paid any sum under subsection (1) of section 13‑D, the (Deputy Commissioner) shall adjust the said sum against the tax payable under this section.

(Explanation. For the purpose of this section, the expression "tax payable" includes the tax payable under section 14B).

9.Section 54 of the Income Tax Ordinance under1979 provides as :‑‑

"Section, 54. Payment of tax with return of income.‑‑Every person who is required, under this Ordinance to furnish a return of total income shall pay the tax payable, on the basis of such return, on or before the date-‑on which he is so required to furnish such return.

(Provided that where such person has paid any sum under subsection (1) or subsection (2) of section 53, the DCIT shall adjust the said sum against the tax payable under this section).

(Explanation.‑‑For the removal of any doubt, it is declared that the expression "tax payable" as used this section includes the tax under section 80D).

10. Non‑payment or short payment of wealth tax under section 14‑A is liable to charge of additional tax under section 31‑B of Wealth Tax Act, 1963. However under the said section two eventualities have been taken care of. Firstly where the assessee fails to pay tax due from him under section 14‑A on the basis of his return or tax paid by him is less than the amount so payable. Secondly, where tax paid under section 14A is less than 80% of tax payable as a result of completion of the relevant assessment under section 16. Under sub‑clause (ii) of clause (b) of section 31‑B(1) further provides that additional tax @ 15% per annum shall be charged from the date .of payment of tax under section 14‑A to the date of completion of assessment under section 16. For the sake of proper appreciation section 31 is reproduced below:‑‑

"section 31B. Additional Wealth Tax.‑‑‑(1) Where an assessee‑-

(a)fails to pay the tax due from him on the .basis of return or has paid an amount less than the amount so payable; or

(b)(has either failed to pay any tax under section 14‑A or the tax paid under the said section) is less than 80 per cent of the tax payable as a result of completion of the relevant assessment under section 16, he shall, without prejudice to his liability under any other provisions of law, be liable to pay an additional amount of tax equal to fifteen per cent per annum.‑‑‑

(i)in cases referred to clause (a), of the whole or such portion of the amount as was not paid from the date it first became payable to the date of payment; and

(ii)in cases referred to in clause (b) of the amount by which tax paid under section 14‑A falls short of 80 per cent of the tax payable under section 16 from the date of payment of the tax under section 14‑A to the date .of completion of assessment under section 16 (and where no tax has been paid under section 14‑A, of the amount equal to eighty per cent of the tax payable under section 16, from the date the tax became first payable under section 14‑A to the date of completion. of assessment under section 16.

11. Section 88 of the Income Tax Ordinance, 1979 which provides for levy of additional tax for default of non‑payment/short payment of tax payable under section 54 is reproduced below:‑‑‑

"(54). Payment of tax with return of income.‑‑‑Every person who is required under this Ordinance to‑ furnish a return of total income shall pay the tax payable, on the basis of such return, on or before the date on which he is so required to furnish such return:

Provided that where such person has paid any sum under subsection (1) of section (2), of section 53 (Deputy Commis sioner) shall adjust the said sum against the tax payable under this section.

(Explanation. For the removal of any doubt, it is declared that the expression "tax payable" as used in this section includes the tax under section 80‑D.)

12. A comparison of section 31‑B of Wealth Tax Act, 1963 and section 88 of Income Tax Ordinance, 1979 shows that while section 88 of the Income Tax Ordinance, 1979 provides for charge of additional tax only where no tax has been paid under section 54 or tax paid is short of tax payable under section 54, section 31‑B of Wealth Tax Act, 1963 also provides that if the tax paid under section 14‑A is less than 80 per cent of the tax payable as a result of assessment under section 16 Wealth Tax Act, 1963, additional tax at the rate of 15% shall be charged from the due date on which tax was payable under section 14‑A that is the date on which it was payable on the basis of wealth tax return, to the date of completion of assessment under section .16. As such section 31‑B has wider scope and in our opinion the judgment cited by the learned counsel for the assessee, reported as 2002 PTD 388 is not applicable in cases of additional wealth tax charged under section 31‑B(1)(b).

13. Thus hearing both the sides and perusing the relevant provision of law as well as the decision of the Honourable Karachi High Court we have reached at the conclusion that provisions of section 31‑B of Wealth Tax, Act, 1963 are not exactly the same as those of section 88 of Income Tax Ordinance, 1979. In fact section 31‑B has wider scope and while there is no provision of charge of additional tax under section 88 on the basis of assessed income. Section 31‑B(1)(b) of Wealth Tax Act, 1963 clearly provides that if tax, paid on the basis of return filed by the assessee is short by 80 % of the tax assessed under section 16 the assessee will be liable to additional wealth tax @ 15% p.a. for the number of days of default. The learned A.R. also argued that even in such a situation additional tax should be worked out from the date of filing of return to the date of the order of the Supreme Court of Pakistan. However, again we refer to sub‑clause (ii) of clause (b) of section 31‑B(1) which clearly provides that it is the date of assessment under section 16 up to which the additional tax shall be calculated. The case‑law referred by the learned A.R. is also distinguishable in this respect and does not apply in cases of levy of additional wealth tax under section 31‑B(1)(b) of Wealth Tax Act, 1963. Accordingly we hold that the order of the DCIT in charging additional tax under section 31‑B(1)(b)(ii) is quite legal and is therefore, upheld.

14. However since the learned CIT(A) vide its order, dated 31‑3‑2003 has set aside the issue of valuation of jewellry for both the years it will be in the interest of justice if at the time of computation of taxable wealth and tax payable thereon as a result of assessment under section 16, for the purpose of charge of additional tax under section 31‑B(1)(b), the value of jewellry is excluded. The DCIT is accordingly directed to recompute additional tax charged by him, under section 31‑B(l)(b) by excluding the value of jewellry from the total wealth assessed under section 23/16(2) of Wealth Tax Act, 1963. Assessment orders for both the years may be modified accordingly.

15. Both the appeals are disposed of as above.

C.M.A./28/Tax (Trib.)Order accordingly.