Per Amjad Ali Ranjha, Accountant Member [Minority view]‑‑‑

Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑C.B.R. Circular No. 11 of 1994, dated 17‑7‑1994‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Agricultural land‑‑‑Assessments were cancelled by the Inspecting Additional Commissioner on the ground that land falling within the municipal limits could not be treated as "agricultural" and directed the Assessing Officer to make proper inquiries and apply proper Deputy Collector Rates for evaluating the properties claimed by the assessee as "agricultural"‑‑‑Validity‑‑‑Assessments had been completed without proper inquiries‑‑‑Definite inquiries were required to be conducted to ascertain whether a particular piece of land in a particular Chak was to be treated as agricultural, commercial or residential‑‑‑Case needed proper inquiries and did not show any reason for interference in the order of the Inspecting Additional Commissioner‑‑‑Enquiries be made to arrive at a proper conclusion as to whether disputed part of the land would be treated as "agricultural" and if so why, and what parts were to be treated as commercial or residential for application of commercial/ residential rates‑‑‑Appeal was dismissed.

Wealth tax‑‑‑

‑‑‑‑Land‑‑‑Determination of status‑‑‑Principles‑‑‑General character of the land, has to determine whether it is agricultural or not, and the actual use to which it is put at a particular point of time is of importance only, insofar as it throws light on the general nature or character of land‑‑ Capacity of the land for being put to agricultural use must be. regarded as the sole exclusive test for deciding the general nature or character of land namely whether it is "agricultural" or not.

Per Rasheed Ahmed Sheikh, Judicial Member; Jawaid Masood Tahir Bhatti, Judicial Member, agreeing [Majority view]‑‑‑

(a) Wealth Tax Act (XV of 1963)‑----

‑‑‑‑S. 17‑B‑‑‑C.B.R. Circular No.11 of 1994, dated 17‑7‑1994‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy. Commissioner's order‑‑‑Agricultural land‑‑‑Assessments were cancelled by the Inspecting Additional Commissioner on the ground that land falling within the municipal limits could not be treated as "agricultural" and directed the Assessing Officer to make proper inquiries and apply proper Deputy Collector rates for evaluating the properties claimed by the assessee as "agricultural"‑‑‑Validity‑‑‑Nothing was available on record wherefrom it could be suggested that invocation of S. 17‑B of the Wealth Tax Act, 1963 was justified‑‑‑Facts vividly spelled out that the Inspecting Additional Commissioner had resorted to check quality of the order passed under SAW) of the Wealth Tax Act, 1963‑‑‑Status of land was held by the Assessing Officer to be agricultural after appraisal of "Farad Jamma Bandi and Khasra Girdowari"‑‑‑Assertion of Inspecting Additional Commissioner that the land was situated within the Municipal Corporation limits and had been transformed into urban residential area and the Assessing Officer could not make any effort whatsoever to physical ascertain that the land was non‑agricultural, would not change the character of the land of being agricultural unless otherwise provided‑‑‑Inspecting Additional Commissioner exercised the jurisdiction under S: 17‑B of the Wealth Tax Act, 1963 without bringing home the precise erroneousness in the assessment order rather the entire structure for cancellation of already completed assessment had been built up without quantifying the exact erroneousness which resulted into loss of revenue‑‑‑Inspecting Additional Commissioner had exercised jurisdiction under S. 17‑B of the Wealth Tax Act, 1963 on mere probabilities and supposed erroneousness in assessment order that land owned by the assessee, being situated in municipal limits had been developed into residential area and ultimately Assessing Officer was directed to make an enquiry and to apply D.C. rate for evaluating the land claimed by the assessee co‑agricultural‑‑‑Such observation lacked objective basis to exercise revisional powers by revising authority, reason being that Inspecting Additional Commissioner himself was not definite that status of the ‑land was agricultural or non‑agricultural‑‑‑Had it been so the Inspecting Additional Commissioner would have certainly directed the Assessing Officer to apply residential or commercial rate of law notified for the class in which the assessee's land was falling‑‑‑Conducting enquiry to ascertain status of land meant that issue .in hand was in the fluid form and also suffered from substantial material to hold the land to be non‑agricultural‑‑‑Provisions of S.17‑B of the Wealth Tax Act, 1963 had not been lawfully exercised by the Inspecting Additional Commissioner.

(b) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Mere disagreement by the Inspecting Additional Commissioner with the Assessing Officer at the result of assessment was not at all a genuine reason for invoking the provisions of S. 17‑B of the Wealth Tax Act, 1963.

1997 PTD (Trib.) 902 rel.

(c) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Assumed facts‑‑‑Objective basis‑‑‑ Provision of S.17‑B of the Wealth Tax Act, 1963 in no way could be invoked on assumed facts unless objective basis were not brought on record which condition was sine qua non for doing so.

(d) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17-B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Jurisdiction‑‑‑Assessment order pre judicial to the interest of revenue itself would not be enough, to vest the Inspecting Additional Commissioner with the powers of suo motu revision in the absence of requirement of erroneousness of assessment‑‑ If an order is erroneous but not prejudicial to the interest of Revenue even then the powers of suo motu revision of the order cannot be exercised.

(e) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Jurisdiction-‑‑Every erroneous order could not be the subject‑matter of revision because the second ingredient i.e. prejudicial to the interest of Revenue must exist while exercising the powers under S. 17‑B of the Wealth Tax Act, 1963‑‑‑Simultaneous existence of the two conditions precedent for exercising the revisional powers by the Inspecting Additional Commissioner must exist to enable him to initiate proceedings under S.17‑B. of the Wealth Tax Act, 1963‑‑ Existence of certain objective basis/facts must be satisfied prior to exercising such powers‑‑‑Some prima facie material must exist on record to show that the tax which was lawfully exigible had not been imposed or that by the application of the relevant statute, on an incorrect or incomplete interpretation, a lesser tax than what was just had been imposed‑‑‑Assessment made by the Assessing Officer, acting in accordance with law, in no way, could be branded to be erroneous by the Inspecting Additional Commissioner simply because according to him the order should have been written more elaborately.

(f) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Jurisdiction‑‑‑Where an order was only erroneous but not prejudicial to the interest of Revenue or was prejudicial to the interest of Revenue but not erroneous, the revisional jurisdiction in S.17‑B of the‑ Wealth Tax Act, 1963, could not be invoked.

(1989) 21 Tax 51 (Trib); (1984) PTO 137 (AJK H.C.); 1994 PTD 659 (Bombay H.C.)‑and WTA No.767/LB/1996, dated 22‑2‑1997 rel.

(g) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S.17‑B‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Jurisdiction‑‑Cancellation of assessment on surmises and conjectures‑‑‑Inspecting Additional Commissioner had cancelled the assessment by holding the same to be erroneous and prejudicial to the interest of Revenue but on the other hand simply proceeded to ask the Assessing Officer to make proper enquiries to ascertain as to whether the land owned by the assessee was agricultural or otherwise and proper D:C. rates should be applied thereafter‑‑ Inspecting Additional Commissioner, was himself not sure that the assessment order was erroneous which would mean that cancellation thereof was a result of surmises and conjectures.

(h) Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 17‑B‑‑‑C.B.R. Circular No.11 of 1994, dated 17‑7‑1994‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Status of "agricultural land" was determined by the Assessing Officer after obtaining "Fard Malkiat and Khasra Girdawari"‑‑ Assessments were cancelled by the Inspecting Additional Commissioner on the ground that land‑ fell within the municipal limits could not be treated as "agricultural" and directed the Assessing Officer to make proper inquiries and apply proper Deputy Collector rates for evaluating the 'properties claimed by the assessee as "agricultural"‑‑‑Validity‑‑‑List of rates of land notified by the Deputy Collector categorized the area, in which the asses see's land fell in the three separate and distinct nomenclature i.e. residential, commercial and agricultural‑‑‑Such factum clearly suggested that part of the land falling in those Chaks was still under cultivation‑‑‑Observation of Inspecting Additional Commissioner that all Chaks were situated within municipal limits and had been transformed into urban residential areas and D.C. had fixed per Marla rate of land of those Chaks for stamp duty purposes, therefore, value of land be valued on the basis of D.C. rates was self belied by the fact that separate rate of agricultural land falling in municipal limits had been notified by the Deputy Collector‑‑‑" Fard Malkiat and Khasra Girdawari" showed that the assessee's land was under cultivation anal was holding .the status of "agricultural" land‑‑‑Inspecting Additional Commissioner's action in cancelling the assessment in terms of S. 17‑B of .the Wealth Tax Act, 1963 could not be held to be legally sustainable‑‑‑Sufficient material was available before the Assessing Officer to hold that the assessee's land was agricultural while the Inspecting Additional Commissioner had acted in flagrant violation of law in cancelling the assessment for the reasons that the provisions of S. 17‑B had been invoked in the case only to check quality of the assessment order‑‑‑Inspecting Additional Commissioner's action, in fact, sounded based on his personal dissatisfaction of the manner in which the assessment was framed which did not provide any justification for exercising jurisdiction under this section, hence, cancellation of the already completed assessment in such circumstances was neither permissible nor tenable in law‑‑‑Simultaneous existence of the two conditions precedent for invoking the provisions of S.17‑B of the Wealth Tax Act, 1963 were missing‑in the case which were sine qua non to do so, thus exercising of revisional jurisdiction by the Inspecting Additional Commissioner was nullity in the eye of law‑‑ Exercise of statutory powers under S.17‑B of the Wealth Tax Act, 1963 was dependent upon availability of objective basis on record as well as quantifying loss of revenue which raked in the case‑‑‑Initiation of proceedings under S.17‑B without presence of objective basis was void ab initio illegal‑‑‑Assessee's appeal was accepted by the Appellate Tribunal.

2002 PTD (Trib.). 1192; I.T.As. Nos. 553/KB & 554/KB of 1999‑2000; (1975) 32 Tax 157; W.T.A. No. 767/LB of 1996; 1997 PTD (Trib.) 902; (1989) 21 Tax 51 (Trib); 1984 PTD 137; 1994 PTD 659; W.T.A. No.767/LB of 1996; (2002) 45 Tax 193 (Trib.); 2004 PTD (Trib.) 1071; 2004 PTO 330 and (1997) 75 Tax 17 (Trib.) ref.

Muhammad Bashir Malik for Appellant.

Mian Javed‑ur‑Rehman, D.R. for Respondent.

Date of hearing: 7th September, 2002.

ORDER

AMJAD ALI RANJHA (ACCOUNTANT MEMBER). ‑‑‑These are three appeals by the assessee relevant to assessment years 1996‑97 to 1998‑99 against the order, of Inspecting Additional Commissioner of Income/Wealth Tax, Range‑II, Faisalabad, dated nil passed under section 17‑B of the Wealth Tax Act.

2. Assessee's only grievance is that IAC through an order under section 17‑B has been wrong in treating the appellant's agricultural land as non‑agricultural keeping in view D.C., Faisalabad's notified rates of residential/commercial for the purpose of stamp duty falling within the Municipal Corporation limits at Faisalabad.

3. Call notices were issued in response to which, Mr. Muhammad Bashir Malik, Advocate was present on behalf of the assessee‑appellant whereas Mi#n Javed‑ur‑Rehman, DR was present on behalf of the revenue. Both have been heard in detail.

4. Facts of the case are that the assessee owns 39‑Acres of agricultural land situated at Chak Nos. 207/RB, 208/RB, 212/RB & 214/RB, Faisalabad. Assessee had declared this land as "agricultural" and had offered 4,212 P.I.Us for wealth tax purposes. Treating this as the basis, wealth tax assessments for the assessment years 1996‑97, 1997‑98 and 1998‑99 had been finalized.

5. IAC on the other hand, felt that as the land fell. within the municipal limits of Faisalabad hence,, it could not be treated as "agricultural" in view of C.B.R.s Circular No.. 11 of 1994, dated 17‑7‑1994 and have cancelled these assessments giving directions to make proper inquiries and applying proper D.C. rates for evaluating the properties claimed by the assessee as "agricultural".

6. A.R. of the assessee argued that all this land was agricultural and in support of it, he has produced copies of Revenue Record stating that it was agricultural. He has also relied upon the reported judgments of the Income Tax Appellate Tribunal as 2002 PTD (Trib.) 1‑192 in I.T.As. Nos. 553/KB and 554/KB of 1999‑2000 relevant to assessment years, 1996‑97 and 1997‑98, and (1975) 32 Tax 157 of the Gujrat High Court in the case of Rasiklal Chimanlal Nagri v. Commissioner of Wealth Tax, dated 10‑11‑1964 in support of his contention. Apart from these, he has also provided copy of ITAT's order in W.T.A. No.767/LB of 1996 (relevant to assessment year, 1993‑94, dated 22‑2‑1997.

7. We have gone through these judgments and we are of the view that the issue is so ticklish that each case has to be decided on its own merits and no generalized rules can be framed as is apparent from these judgments. However, we agree with the finding given in one of these judgments that it is the general character of the land, which must determine whether it is agricultural or not, and the actual use to which it is put at a particular point of time is of importance only, insofar as it throws light on the general nature or character of land. Thus capacity of the land for being put to agricultural use must be regarded as the sole exclusive test for deciding the general nature or character of land namely whether it is "agricultural" or not.

8. However, it may not be out of place to mention that AR of the assessee has also provided copies of D.C. rates as notified by the D.C., Faisalabad. It may not be out of place to mention that because of extensive growth in the city of Faisalabad, major portion of the land belonging to old Chaks has been made a part of the municipal limits of Faisalabad. Thus, DC has declared rates of agricultural land, commercial land and residential land separately in respect of different squares falling in a particular Chak. These rates are given in the table relevant to assessment year, I 997‑98 respecting different Chaks.

9. Now for example, we take the case of Chak No. 207/RB, where. it has been stated that price of agricultural land is to be evaluated at the rate of Rs.3,75,000 per acre, but in different squares, value of residential and commercial land varies between Rs.22,500 to Rs.60,000 per marla in case of commercial land and between Rs.12,300 to Rs.20,600 per marla in case of residential lands. Similar is the position of lands in other Chaks given in the table.

10. So this analysis clearly shows that assessments have been completed by the ITO without proper inquiries and in such cases, definite inquiries are required to be conducted to ascertain whether as to a particular piece of land in a particular Chak is to be treated as agricultural, commercial or residential. Thus, we agree with the findings given by the IAC that the case needs proper inquiries hence, we do not find any reason for interference in his order and direct that inquiries on above stated lines be made to arrive at a proper conclusion as to whether what part of the land would be treated as "agricultural" and if so why, and what parts are to be treated as commercial or residential for application of commercial/residential rates.

11. Assessee's appeals stand rejected and disposed.

(Sd.)

(Amjad Ali Ranjha)

Account Member

RASHID AHMAD SHAIKH (JUDICIAL MEMBER).‑‑‑I had the privilege to go through the proposed order of my learned Accountant brother and do not incline to agree with the reasonings and the findings recorded therein. In my opinion the order passed by the Assessing Officer under section 16(3) of the Wealth Tax Act, 1963 was neither erroneous nor prejudicial to the interest, which could be subjected to the provisions of section 17‑B of the Wealth Tax Act, 1963. What happened in this case was not that the assessee was holding 39 acres of agricultural land in Chak Nos.207, 208 & 214/RB for which separate agricultural wealth tax returns were filed on the basis of produce index unit (PIU). On assessment the Assessing Officer after having taken regard to the "FARD JAMABANDI", held nature of the land in question to be agricultural one and computed its value at Rs.16,84,800 on the basis of PIU.

2. Subsequently, the IAC was prompted by the fact that the land in question is situated within the Municipal Corporation limit of Faisalabad which has been transformed into urban residential area and the District Collector has fixed per marla rate in respect of the land falling in those Chaks for the purposes of registration and levy of stamp duty. In fact those rate should have been adopted by the Assessing Officer for valuing the land in question being the same was non agricultural. If at all for any area, rates of land were not notified by the D.C., the Assessing Officer had to evaluate the lands on the basis of rates at which other properties situated in the adjoining areas were got registered as has been explained in the‑ C. B. R. Circular No. 11 of 1994, dated 17‑7‑1994. In order to hold the land to be non‑agricultural it was also explained by the IAC that if the assessee starts growing fodder or any other agricultural item within his own land even then its value for the purposes of wealth has to be worked out on the basis‑of non‑agricultural land and not otherwise. After completing all the other formalities, the IAC resorted to cancel the already completed assessment made under section 16(3) by invoking the provisions of section 17‑B of the Wealth Tax by observing that the Assessing Officer had, failed to make any effort whatsoever to physically ascertain that the land in question was not agricultural and as such erroneous orders were passed by evaluating the lands owned by the assessee to be in the status of agricultural one whereas rates of non agricultural land, as are notified by the DC, were to be applied. The Assessing Officer was accordingly directed to make proper enquiries and to apply proper DC rates for evaluating the land claimed by the assessee to be an agricultural one.

3. Perusal of the impugned order, reveals that the learned Accountant Member while maintaining the IAC's order has not appreciated the facts of the case in its proper perspective. In fact there is nothing on record wherefrom it could be suggested that invpcation of section 17‑B was justified in the present case. Rather the foregoing facts vividly spells out that the IAC's has resorted to check quality of the order passed under section 16(3) of the Wealth Tax Act. It is so because status of the land was held by the Assessing Officer to be agricultural after appraisal of "Farad Jamma Bandi and Kashra Girdowari" copies of which have also been placed before us for our consideration. Mere IAC's assertion that the land in question is situated within the Municipal Corporation‑limits and have been transformed into urban residential area and the Assessing Officer could not make any effort whatsoever to physically, ascertain that the land was non‑agricultural, would not change the characteristic of the land of being agricultural unless otherwise proved. Now this is a settled law that mere disagreement by the IAC with the Assessing Officer at the result of assessment was not at all a genuine reason for invoking the provisions of section 17‑B of the Wealth Tax Act, 1963. I remember that in a case cited as 1997 PTD (Trib.) 902 it has categorically been held therein that poor quality of assessment could not provide justification for exercising jurisdiction under section 66‑A of the Income Tax Ordinance, 1979. This is important to mention here that section 17‑B of the Wealth Tax Act, 1963 stands in pari‑meteria with section 66A of the Income Tax Ordinance, 1979. Thus the ratio decidendi and theprincipal laid down in the reported case squarely applies to the facts of the present case.

4. Actually the IAC has exercised the jurisdiction under section 17‑B of the Wealth Tax Act without bringing home the precise erroneousness in the assessment order rather the entire structure for cancellation of the already completed assessment has been built up without quantifying the exact erroneousness which resulted into loss of revenue. In no way the provision of section 17‑B of the Wealth Tax Act can be invoked on assumed facts unless objective basis are not brought on record which condition is sine qua non for doing so. In the present case the IAC has exercised the jurisdiction under section 17‑B of the Wealth Tax Act on mere probabilities and supposed erroneousness in the assessment order that the land owned by the assessee, being situated in Municipal Limit of Faisalabad has been developed into residential area and ultimately the Assessing Officer was directed to make an enquiry and to apply D.C. rate for evaluating the land claimed by the assessee as agricultural. This observation of the IAC lacks objective basis to exercise revisional powers by the revising authority reason being he himself was not definite that status of the land was agricultural of non‑agricultural. Had it been so the, IAC would have certainly directed the Assessing Officer to apply residential or commercial rate of land notified by the DC for the area in which the assessee's land was falling. Conducting enquiry to ascertain status of the land means that issue in land in the fluid form and also suffers from substantial material to hold the land in question not be non‑agricultural. Thus the provisions of section 17‑B of the Wealth Tax have not been lawfully exercised by the IAC in the instant case.

5. It may be said in such a situation that in the opinion of the IAC the assessment order is prejudicial to the interest of Revenue but that by itself would not be enough to vest the IAC with the powers of suo motu revision because the first requirement, namely that the order should be erroneous is absent. Similarly if an order is erroneous but not prejudicial to the interest of Revenue even then the powers of suo motu revision of the order cannot be exercised. It is also imperative to mention here that every erroneous order cannot be the subject‑matter of revision because the second ingredient of section. 17‑B of .the Wealth Tax Act must exist while exercising the powers under this section. So, simultaneous existence of the two conditions precedent for exercising the revisional powers by the IAC must exist to enable him to initiate proceedings under section 17‑B of the Wealth Tax Act, 1963. In addition to existence of certain objective basis/facts is must to be satisfied prior to exercising such powers. It means that there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute, on an incorrect or incomplete interpretation, a lessor tax than what, was just has been imposed. In no way the Assessing Officer acting in accordance with law makes a certain assessment which cannot be branded to be erroneous by the IAC simply because according to him the order should have been written more elaborately.

6. To me simultaneous existence of the two conditions precedent for invoking the provisions of section 17‑B of the Wealth Tax Act, 1963 are missing in the instance case. I am therefore of the considered view that where an order was only erroneous but not prejudicial to the interest of Revenue or was prejudicial to the interest of Revenue but not erroneous, the revisional jurisdiction as are contemplated in section 17‑B of the Wealth Tax Act, 1963 cannot be invoked. Strength in this regard has been sought from the ratio settled in the case‑law cited as (1989) 21 Tax 51 (Trib), (1984) PTD 137 (AJK H.C.), 1994 PTD 659.(Bornbay H.C.) and the one unreported decision of the Tribunal bearing W.T.A. No.767/LB of 1996, dated 22‑2‑1997.

7. Proceeding further it is also noted that on the one hand the IAC has cancelled the already completed assessment by holding to be erroneous and prejudicial to the interest of Revenue but on the other hand he has simply proceeded to ask the Assessing Officer to make proper enquiries to ascertain as to whether the land owned by the appellant is agricultural or otherwise and proper D.C. rates should be applied thereafter. From this factum it is vividly clear that the IAC was himself not sure that the assessment order was erroneous which would mean that cancellation thereof was a result of surmises and conjectures.

8. It is also worth‑noting that on going through the list of rates of land notified by the Deputy Collector Faisalabad, he has categorized the area, in which the assessee's land is falling, in three separate and distinct nomenclature i.e. Residential, Commercial and the agricultural and the learned DR could not dislodge this fact with any convincing reasons. This factum clearly suggests that part of the land falling in those Chaks is still under cultivation. Thus, the IAC's observation that all those Chaks are situated within the Municipal Limits of Faisalabad and have been transformed into urban residential areas and D.C. has fixed per marla rate of land of those Chaks for stamp duty purposes, therefore, value of the land be valued on the basis of D.C. rates, is self belied by the fact that separate rate of agricultural land falling in Municipal Limit has been notified by the D.C. As is evident from the "Fard Malkiat and Khasra Gardawari" that the assessee's land was under cultivation and as such was holding the status of agricultural land. This Tribunal in almost closed proximity to the assessee's case reported as (2002) 45 Tax 193 (Trib.) has not approved conversion of agricultural land into a residential status which was situated in Nazimabad are of Karachi city. Judging the case from this angle as well, the IAC's action in cancelling the already completed assessment in terms of section 17‑B of the Wealth Tax Act can not be held to be legally sustainable.

9. Next contention of the learned counsel for the assessee was that the assessee has been treated step‑motherly by the IAC by not holding his piece of land to be agricultural one particularly when in the cases of other assessee; whose hands are also falling in the same Chacks in which the assessee's land is situated, are being valued as agricultural land. Reference in this regard has been made to a case bearing NTN 329‑0088443.

10. Anyhow, resume of foregoing discussion is that I have no ambiguity in my mind but to hold that there was a sufficient material before the Assessing Officer to hold the assessee's land to be agriculture while the IAC has acted in flagrant violation of law in cancelling the already completed assessment trade under section 16(3) of the Wealth Tax Act, 1963 for the following reasons:‑‑

(1) That the provisions of section 17‑B have been invoked in the instant case only to check quality of the assessment order. The IAC's action, in fact, sounds more on account of his personal dissatisfaction of the manner in which the assessment was framed which does not provide any justification for exercising jurisdiction under this section. Hence, cancellation of the already completed assessment in such circumstances was neither permissible nor tenable in law.

(2) That simultaneous existence of the two conditions precedent for invoking the provisions of section 17‑B are missing in the instance case which are sine qua non to do so. Thus exercising revisional jurisdiction by the IAC is nullity in the eye of law.

(3) That exercise of statutory powers under section 17‑B of the Wealth Tax Act is dependent upon availability of objective basis on record as well as quantifying loss of revenue which lack in the instant case. This view of mine is further strengthened from the observation of the learned AM whereby he while upholding the IAC's findings to be justified has himself admitted that still a proper enquiry is needed to arrive at a decision as to whether the land owned by the appellant is agricultural or not. Thus initiation of proceedings under section 17‑B without presence of objective basis are void ab initio illegal.

10. Consequently the impugned order is vacated while restored those of the Assessing Officer. The assessee's appeals are accordingly succeeded.

(Sd.)

(Rasheed Ahmad Sheikh) Judicial Member

Since, dissenting judgments have been rendered by the Bench, therefore, this case may be placed before the Hon'ble Chairman ITAT to appoint the third member in order to resolve the following question.

Whether on .the facts and, in the circumstances of the case initiation of proceedings under section 17‑B of the Wealth Tax Act was legally sustainable or not?

(Sd.)(Sd. )

(Amjad Ali Ranjha)(Rasheed Ahmad Sheikh)

Accountant MemberJudicial Member

Muhammad Bashir Malik for Appellant Anwar Ali Shah, D.R. for Respondent. Date of hearing: 15th October, 2004. Date of Order 15th October, 2004.

JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).‑‑ These three wealth tax appeals have been entrusted to me by the Hon'ble Chairman to act as a referee because difference of opinion has cropped up between my learned brothers, the Judicial Member (Mr. Rasheed Ahmad Sheikh) and the Accountant Member (Mr. Amjad Ali Ranjha). Following question has been referred for adjudication:‑‑

"Whether on the facts and in the circumstances of the case, initiation of proceedings under section 17‑B of the Wealth Tax Act was legally sustainable or nor?"

The assessee in this case owns 39 acres of agricultural land situated at Chaks 207, 208, 212, 214/RB, Faisalabad. The assessee had declared this land as agricultural and has offered 4212 PIUs for wealth tax purposes. Copy of fard jamabandi supporting the holding of land as per assessment order has also been furnished, perused and placed on file. The Assessing Officer has finalized the assessment for the three years under review on the basis of the declared version. Assessments framed by the Assessing Officer are reopened under section 17‑B of the Wealth Tax Act, 196.3 observing, that land declared, by the assessee as agricultural fell within the municipal corporation limits of Faisalabad and therefore cannot be treated as agricultural in view of C.B.R's Circular No. 11 of 1994, dated 17‑7‑1994 and he, therefore, cancelled the assessments for the three years giving directions to the Assessing Officer to make proper enquiries and apply proper DC rates for evaluating the properties claimed by the assessee as agricultural.

The assessee against the above said order passed by the learned IAC, has come up in appeal before this Tribunal. My Learned brother, Mr. Amjad Ali Ranjha, Accountant Member has upheld the action of the learned IAC made under section 17‑B with the observation that "assessments have been completed by the ITO without proper enquiries and in such cases definite enquiries are required to be conducted to ascertain whether a particular piece of land in a particular chak is to be treated as agricultural, commercial or residential. Thus, we agree with the findings given by the IAC that the case needs proper inquiries, hence we do not find any reason for interference in his order and direct that enquiries on above stated lines be made to arrive at a proper conclusion as to whether what part of the land would be treated as "agricultural" and if so why, and what parts are to be treated as commercial or residential for application of commercial/residential rates".

On the other, hand, my learned brother, Judicial Member has vacated the impugned order of the learned IAC and has restored the assessments made by the Assessing Officer for the following three reasons:‑‑

(1) That the provisions of section 17‑B have been invoked in the instant case only to check quality of the assessment order the IAC's action, intact, sounds more on account of his personal dissatisfaction of the manner in which the assessment was framed which does not provide any justification for exercising jurisdiction under this section. Hence, cancellation of the already completed assessment in such circumstances was neither permissible nor tenable in law.

(2) That simultaneous existence of the two conditions precedent for invoking the provisions of section 17‑B are missing in, the instance case which are sine qua non to do so. Thus exercising revisional jurisdiction by the IAC is nullity in the eye of law.

(3) That exercise of statutory powers under section 17‑B of the Wealth Tax Act is dependent upon availability of objective basis on record as well as quantifying loss of revenue which lack in the instance case. This view of mine is further strengthened from the observation of the learned AM whereby he while upholding the IAC's findings to be justified has himself admitted that still a proper enquiry is needed to arrive at a decision as to whether the land owned by the appellant is agricultural or not. Thus initiation of proceedings under section 17‑B without presence of objective basis are void ab initio illegal.

To reach the above reasons/findings, my learned brother, the Judicial Member has discussed the relevant issues in detail and has placed reliance on the decision of the Hon'ble High Court and this Tribunal.

Mr. Muhammad Bashir Malik, Advocate has appeared and is supporting the view taken by my learned brother, the Judicial Member. He has contended that the subject land is still under cultivation and the Assessing Officer after considering all the facts has accepted the land as agricultural. He has also placed before me the up to date Nakal from Khasra Girdawari of the subject land showing the present appellant, Mr. Arshad Hussain cultivating the land himself "Khudkasht". Learned Counsel for the appellant has contended that in the case of co‑owner of the subject land Mian Muhammad Anwar, the contention of the land being agricultural has been accepted. According to learned counsel, the land of co‑sharer is situated in the same vicinity and is of similar nature. Learned counsel has also placed before me another parallel case of Ch. Umar Draz Khan, bearing NTN 03‑29‑0088493 in which case although his land is situated in Chak Nos.207, 279, 59, 69 and 68/RB, Faisalabad which is within municipal limit of Faisalabad but the Assessing Officer has accepted the land as agricultural for the assessment year, 1997‑98. Learned counsel for the appellant in addition to the cases already referred in the order of the Tribunal has also placed before me the latest decision of this Tribunal reported as 2004 PTD (Trib.) 1071 which has been decided by the Bench consisting of my learned brother, the Judicial Member (Mr. Raheed Ahmad Sheikh) and the Accountant Member (Mr. Amjad Ali Ranjha) among whom the present difference of opinion has arisen, wherein it has been held that "actually in Wealth Tax proceedings it is that status of the land, which is to be taken for the purposes of determining value of immovable assets". According to learned counsel, in the present case, the land was used for the agricultural purposes on the valuation date and is still under cultivation. Learned counsel has also placed before us the decision of the Honourable High Court reported as 2004 PTD 330 wherein it has been held that prejudicial to the interest of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer, every loss of revenue in consequence of an order of the Assessing Officer could not be treated as prejudicial to the interest of the Revenue. According to learned counsel although the above findings are in the matter of income Tax under section 66A but as the section 66A is parallel to the section 17‑B of the Wealth Tax Act, therefore, the same principle should be followed in the case of wealth tax also.

On the other hand, Mr: Anwar Ali Shah, learned DR has contended that as the learned Accountant Member has upheld the treatment of the learned IAC, cancelling the assessment giving direction to make proper enquiries and applying proper DC rates for valuing the property as agricultural placing reliance on the C.B.R. Circular No.11 of 1994, dated 17-7‑1994 and the assessee has each and every opportunity to explain his position before the Assessing Officer, there is no justification for cancelling the action of the learned IAC taken under section 17‑B.

I have heard learned representatives of both the parties and have also perused the impugned order of the learned IAC, the assessment order, the case law referred and other documents as placed before me by the learned counsel for the assessee.

While perusal of the impugned order of the learned ICA, I have found that he has invoked section 17‑B for the reason that areas in which the land as declared by the assessee is situated are within the municipal limits of Faisalabad and has been transformed into urban areas. It has been further observed by the learned IAC that District Collector of Faisalabad has fixed per marla rates in respect of land situated in these chaks for the registration/stamp papers purposes. According to learned IAC in case any rates were not fixed by the DC in respect of any area the Assessing Officer had to evaluate the lands on the basis of rates at which other properties situated in the adjoining areas were got registered in view of C. B.R.'s Circular No. 11 of 1994, dated 17‑7‑1994.

I 'have further noted that assessment in response to the notice under section 17‑B furnished before the Assessing Officer copies of the crops record according to which the land was cultivated by the assessee himself and it was explained by the learned representative of the assessee that .it was an agricultural land but the learned IAC discarding the contentions made by the assessee has cancelled the assessments with the direction to make proper enquiries and apply DC rate for evaluating the land declared by the assessee as agricultural. I am of the view that while reopening the assessment made by the Assessing Officer the learned IAC, has not properly appreciated the facts of the case in 'its true prospective. I have found nothing on record to justify the action of the learned IAC in reopening the assessments. I agree with the findings given by my learned brother, the Judicial Member that status of land was held by the Assessing Officer to be agricultural after appraisal of Fard Jamabandies and Khasra Girdawari, copies of 'which have also been placed before me by the learned representative of the appellant. Likewise I agree with the observation made by learned Judicial Member that mere IAC's assertion that land in question is situated within municipal limits and have been transformed into urban residential area and the Assessing Officer could not make any effort whatsoever to ascertain that land was non‑agricultural would not change the characteristic of the land being agricultural unless otherwise proved. I have also perused the case‑law submitted by the learned counsel of the assessee. I have noted that in a case reported as (1997) 75 Tax 17 (Trib.), it has been held that poor quality of assessment could .not provide justification for exercising jurisdiction under section 66A of the Income Tax Ordinance which is parameter with section 17‑B of the Wealth Tax Act, I am, therefore, considering all the above facts and the reasons given by my learned brother, the Judicial Member, of the view that learned IAC has cancelled the already completed assessments without any justification on the basis of surmises and conjectures and the order passed by the IAC is not sustainable.

As I fully endorse the conclusion as made by my learned brother, the Judicial Member, consequently the impugned order of the learned IAC is vacated while the assessments made by the Assessing Officer for all the three years under review are restored and all the three appeals of the assessee are allowed.

C.M.A./263/Tax (Tirb.) Appeals allowed.