W.T.As. Nos. 92/KB to 97/KB, 87/KB to 91/KB of 2005, decided on 16th February, 2006. VS W.T.As. Nos. 92/KB to 97/KB, 87/KB to 91/KB of 2005, decided on 16th February, 2006.
2006 P T D (Trib.) 1211
[Income-tax Appellate Tribunal Pakistan]
Before S. Hasan Imam, Judicial Member and Agha Kafeel Barik, Accountant Member
W.T.As. Nos. 92/KB to 97/KB, 87/KB to 91/KB of 2005, decided on 16/02/2006.
(a) Wealth Tax Act (XV of 1963)---
----Ss. 16(3) & 16(5)/23/17---Assessment---Cancellation of assessment order by the First Appellate Authority for the alleged unauthorized representation of an Advocate before the Assessing Officer during assessment proceedings in response to statutory notices---Validity---Apparently, the said gentleman was duly authorized by the assessees to attend Wealth Tax Assessment proceedings, otherwise he had had no business to waste his time and energy---Even otherwise his mala fide intention or any personal gain in attending assessment proceedings of the two assessees had not been proved---First Appellate Authority was not justified to ignore the circumstantial evidence and was swayed away at the instance of the assessees which appeared to be mala fide---Order of Fist Appellate Authority canceling orders were vacated by the Appellate Tribunal.
(b) Wealth Tax Act (XV of 1963)---
----Ss. 16(5) & 17---Assessment---Ex parte assessment orders had been passed---Service of notices appeared to be doubtful---Such orders were set, aside by the Appellate Tribunal for de novo assessments after issue and service of statutory notices:
(c) Wealth Tax Act (XV of 1963)---
----S.31B(1)---Additional wealth tax---Late payment of admitted tax liability on the basis. of wealth tax returns was proved from the record---Assessing Officer was' empowered to charge additional tax in such casesFirst Appellate Authority, however, observed that the Assessing Officer did not accord the assessee fair opportunity of being heard---Appellate Tribunal set aside all the orders with the direction to the Assessing Officer to issue show-cause notices and accord reasonable opportunity to the assessee of being heard.
Agha Hidayatullah, D.R. for Appellant.
Abdul Tahir for Respondent.
Date of hearing: 16th February, 2006.
ORDER
The department has filed these appeals against two orders of CIT(A) Hyderabad, dated 21-6-2005 through which he cancelled all orders passed under sections 16(3)/23, 16(5) and 31 B(1) of Wealth Tax Act, 1963 in the case of Mr. Islamuddin and Mrs. Naureen Islamuddin. Since. all the facts and circumstances of both cases and appeals on common and the orders of the CIT(A) also same all these appeals are disposed of by this consolidated order.
2. Facts of the two cases are as under:--
(a) The returns of wealth tax were filed in Karachi which were transferred to Sukkur Zone on point of jurisdiction.
(b) The Assessing Officer issued statutory notices and subsequently passed orders as under':-
Mr. Islamuddin Sheikh
Assessments of Wealth Tax.
1995-96 & 1996-97under sections 16(3)/23
1997-98 and 1998-99under sections 16(5)/17
Orders of Addl. Tax
1994-95, 1995-96 & 1996-97under section 31B(1)
Mrs. Naureen Islamuddin
Assessments of Wealth Tax
1994-95under sections 16(3)
1995-96 & 1996-97under sections 16(3)/23.
Orders of Addl. Tax
1994-95 and 1995-96under section 31B(1)
3. The assessees challenged these orders before CIT(A) taking various grounds of appeals. The CIT(A), however, adjudicated these appeals vide his orders and cancelled all the orders on two scores; assessment orders under sections 16(3) and 16(5)/23/17 for the alleged unauthorized representation of Syed Mehmoodul Hassan Zaidi before the Assessing Officer during assessment proceedings in response to statutory notices issued by him and orders under section 31B(1) for want of issue of show-cause notices and being without signatures of the Assessing Officer.
4. Thus, the order of the CIT(A) on the case of Mr. Islamuddin is as under:--
On assessments passed under sections 16(3)/16(5) of Wealth Tax Act, 1967
The arguments advanced by the AR of the appellant are considered perusal of record it transpires that the wealth tax assessment for the assessment years 1995-96, 1996-97 were completed under sections 16(3)/23 of Wealth Tax Act 1963, whereas the assessments for assessment years 1997-98 and 1998-99 were finalized ex parte under section 16(5) of Wealth Tax Act, 1963. The record shows that in the re-assessment proceeding for the assessment years 1995-96 and 1996-97, the Assessing Officer issued notices from time to time and the compliance was made. It is also noted that during the period of proceedings the appellant was in jail and on the behalf of appellant, the Manager Mr. Mehmoodul Hasan appeared before the Wealth Tax Officer. The Assessing Officer without obtaining of any authority letter issued from the appellant allowed the manager to proceed the case of the appellant which is totally unlawful and unwarranted as the Manager was never authorized to appear before the Assessing Officer which is violation of section 2 and sub-rule, (1) & (2) of Income Tax Act, 1982.
The A.R. of the appellant relying on various reported judgments supra fully applies to the instant case.
As regard the assessments for the assessment years 1997-98 and 1998-99 the assessments were finalized ex parte under section 16(5) read with section 17 of Wealth Tax Act, 1963. The record shows that notices under sections 17 and 16(2) of the Wealth Tax Act, 1963 were not served on the appellant as the facts that the appellant was in jail custody. The action of the Assessing Officer to re-open the assessments without serving the notice properly is not sustainable in the eyes of law.
On order of Additional Tax under section 31B(1) of Wealth 'Fax Act, 1963
Moreover the orders passed for charging of additional tax under section 31B(1)(a) the assessment year 1994-95, 1995-96 and 1996-97. The record shows that the Assessing Officer failed to issue show-cause notice as required under the law while charging the Additional Tax. It is also noted from the record that the order passed under section 31B along with the orders passed under section 16(3) are without signatures and no separate orders were passed by the Assessing Officer. Since the original assessment orders were cancelled. Consequently the orders passed under section 31B(1)(a) are not ustainable in the eyes of law are also cancelled.
5. The order of CIT(A) in the case of Mrs. Naureen Islamuddin is the same, except that in the case of Islamuddin in the CIT(A) has also observed that ex parte orders under section 16(5)/17 for assessment years 1997-98 and 1998-99 were finalized without valid service of notices.
6. Heard Mr. Agha Hidayatullah, D.R. and Mr. A: Tahir Ansari, Advocate and learned counsel for the assessee respondent.
7. After going through the arguments of both sides and perusing the record produced before us, our findings are as under:
(a) Although the attendance of Syed Mahmood-ul-Hasan Zaidi has been challenged before the CIT(A) by the assessee it was not challenged before Assessing Officer.
(b) From the record it appears the Mr. Mehmood ul Hasan was the Manager of the two individuals and was looking after their business affairs as well as financial interest. From the order sheets of assessment proceedings it also appears that he was also 'Resident Directory Kiran Sugar Mills in which both husband and wife are directors.
(c) The Assessing Officer in his assessment orders Mrs. Naureen has duly recorded that,
"In compliance of statutory notices Mr. Mehmood ul Hassan Zaidi attended from time to time and filed power of attorney"
Apparently, the said gentle man was duly authorized by the two assessees to attend Wealth Tax Assessment proceedings, otherwise he had no business to waste his time and energy. Even otherwise his mala fide intention' or any personal gain in attending assessment proceedings of the two assessees has not been proved by the learned counsel.
(d) The same person Mr. Mehmood ul Hassan Zaidi had earlier attended assessee's appeals hearing before the Additional Appellate Commissioner Sukkur, who was pleased to set aside the assessments in the case of Mr. Islamuddin Sr. vide his order Nos. 236 to 239, dated 20-3-1999. The assessee neither disowned him at that stage or challenged his authority.
(e) Regular attendance of Mr. Mahmood ul Hasan before Assessing Officer in assessee's income tax and wealth tax cases even in the past has not been denied by the A.R.
(f) As regards the power of attorney of Mr. Mehmood ul Hassan not being available on the record as alleged by the learned A.R., we cannot ignore the finding of the Assessing Officer that he attended duly authorized and filed his power of attorney. On the other hand, the DR alleged that the record was tampered and the power of attorney was removed. In these circumstances the CIT(A) should have summoned Sayeed Mahmood ul Hasan to record his statement which was not done. When inquired by the Bench about whatabouts of Mr. Mahmood ul Hasan it was sadly learnt that he has since expired.
(g) It is also an admitted fact that neither Mr. Islamuddin nor his wife Mrs. Naureen ever attended any proceedings personally before the Assessing Officer or AAC or CIT(A). They were always represented by the said gentleman, namely Syed Mehmoodul Hasan Zaidi.
8. In view of the above circumstantial evidence we hold that the Assessing Officer rightly recorded the attendance of Syed Mashoodul Hasan during assessment proceedings under section 16(3) in both the cases. The CIT(A) was not justified to ignore all this circumstantial evidence and was swayed away by the instance of the assesses which appears to be mala fide. Accordingly, we vacate the orders of CIT(A) cancelling orders under sections 16(3) and 16(3)/23 for assessment years 1994-95, 1995-96 and 1996-97 in the case of Mr & Mrs. Naureen and assessment orders passed under sections 16(3)/23 for assessment years 1994-95, 1995-96 and 1996-97 in the case of Mr. Islamuddin Sheikh.
9. The assessments for 1997-98 and 1998-99 in the case of Mr.Islamuddin Sheikh have been passed ex parte under section 16(5)/17. Since the service of notice appears to be doubtful and none attended in compliance of these notices, we deem it justified to set aside these orders for de novo assessments, after issue and service of statutory notices.
10. Late payment of admitted tax liability on the basis of wealth tax returns is proved from the record. In such an event the Assessing Officer is empowered to charge additional tax under section 31B(1) of Wealth Tax Act, 1963. But as the CIT(A) has observed the Assessing Officer did not accord the assessing fair opportunity of being heard. Accordingly, we set aside all the orders of Additional Tax under section 31 B(1) in both cases with the direction to the Assessing Officer to issue show-cause notices and thus accord reasonable opportunity to the assessee of being heard.
11. All the appeals are disposed of as above.
C.M.A./26/Tax (Trib.)Order accordingly.