M.As. Nos.287/LB to 289/LB, 331/LB to 333/LB of 2003, decided on 23rd April, 2005. VS M.As. Nos.287/LB to 289/LB, 331/LB to 333/LB of 2003, decided on 23rd April, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 155 (2005)

(a) Wealth Tax Act (XV of 1963)---

---Ss. 35, 133 & 134---Rectification of earlier order---Powers of Appellate Tribunal---Appellate Tribunal, in hierarchy of Income tax law, being the final fact finding body, its decision on question of fact was not liable to be questioned before the High Court or the Apex Court---Appellate Tribunal was a Court of appeal of fact as well as of law and it could interfere with its order, but could do so only on judicial considerations and on the basis of reasons that suggested clearly that it had committed an error of law or such fact that had vitiated its considerations and gone perverse for such reasons---Appellate Tribunal was certainly not empowered to imply its jurisdiction arbitrarily---Whatever it would do, must be done in consonance with sound judicial principles and in accordance with well-accepted doctrines applicable to judicial bodies and it must maintain judicial balance between the claims of public revenue and the tax payer---Being the final Authority on question of fact, Tribunal in deciding an appeal was bound to consider all evidence and the arguments raised by parties---Was not enough that the Tribunal mere recorded a bare conclusion without setting out any reason in support thereof; if the Tribunal had done so, it could not be assumed that in so recording the conclusion, the Tribunal had considered the evidence---Tribunal had to act judicially in the sense that it had to consider with due care all material facts and evidence in favour and against assessee and record its findings on all contentions raised by assessee or the Commissioner in the light of evidence and relevant law.

2003 PTD 647 ref.

(b) Wealth Tax Act (XV of 1963)---

----S. 35---Rectification of mistake---Scope and extent---Under provisions of S.35 of Wealth Tax Act, 1963, there was no ambiguity to the factum that a mistake capable of being rectified was not confined to clerical or arithmetical mistake; on the other hand it did not cover any mistake which could be discovered by a complicated process of investigation, argument or proof---Phrase used in S.35 of Wealth Tax Act, 1963 "any mistake apparent from the record" comprehended error which, after a judicious probe into the record from which it was supposed to emanate, were discerned--Mistake was mostly subjective and dividing line in border area was thin and indiscernible and it was something which was duly and judiciously instructed mind could find out from the record---Mistake could be either of law or of fact which could be rectified, which however, would depend on facts and circumstances of each case---If an obvious error a lurking mistake or an omission leading to a mistake was discovered from record, it could be and ought to be corrected and rectified---If it related to a fact it should be possible to say "that was obviously a mistake" when an earlier order passed by an Authority was founded on a mistaken assumption and the error was discovered, the power under S.35 of Wealth Tax Act, 1963 could be resorted to because the very basis of earlier order required rectification--Fact that Tribunal was the last fact finding Court, could not be denied meaning thereby that Tribunal on factual controversy was empowered to rectify its order provided material of primary importance, which was placed on record, had escaped consideration---Had there been any question of law involved and the higher Appellate Court had answered that question against the assessee, the Tribunal would have certainly become functus officio to rectify its order---Section 35 of Wealth Tax Act, 1963, without any uncertainty of meaning, conferred jurisdiction not only upon Wealth Tax Officer, the Appellate Assistant Commissioner, the Commissioner, but also upon the Appellate Tribunal to rectify its order if any mistake apparent from record either on its own motion or any such mistake which had been brought to the notice of said Authorities---Clog, however, had been put on the powers of the Tribunal where, as a result of rectification, enhancement in assessment would occur, no such rectification would be made without giving a reasonable opportunity of being heard to assessee-Limit of time had also been provided in subsection (4) of S.35 of Wealth Tax Act, 1963 whereby rectification of order could be sought; said subsection had provided that rectification of mistake could be made at any time within four years from the date of any order passed by tax authorities.

(c) Wealth Tax Act (XV of 1963)---

----S. 35---Rectification of mistake---Powers of Authorities---Neither the judgment of Apex Court nor that of High Court would create any hindrance in the way of Tribunal, the Commissioner, the Appellate Assistant Commissioner and the Wealth Tax Officer that it/he could not rectify its/his order where factual controversy had been brought to the notice of said Authorities---Section 35 of Wealth Tax Ordinance, 1963 had extended wide powers to the said Authorities that if they, after examination of record, found out that mistake of law had crept in their orders they could suo motu rectify such orders; in such eventuality Appellate Tribunal was vested with the powers to rectify its order on factual premises, that was why Legislature in its wisdom had conferred jurisdiction not only upon the Tribunal, but also on other tax authorities such as Commissioner, Appellate Assistant Commissioner and Wealth Tax Officer to rectify the mistake, which was apparent from the record and had been brought to its notice or on its own motion, reason being if there was a factual controversy that ought to be rectified at the Appellate Tribunal level or the authorities.

Dr. Shahid Siddique Bhatti, D.R. for Applicant.

Zia H. Rizvi for Respondent.

Date of hearing: 23rd April, 2005.

ORDER

RASHEED AHMAD SHEIKH (JUDICIAL MEMBER).---These are six miscellaneous applications pertaining to assessment year 1993-94, 1994-95 and 1995-96 whereby the consolidated order passed by this Tribunal recorded in W.T.As. Nos.842,843 and,844/LB of 1999, dated 31-10-2000 has been sought to be rectified under section 35 of the Wealth Tax Act.

2. It is astonishing to note that six applications on similar set of facts, have been filed by the department against the Tribunal's consolidated order which pertains to three assessment years mentioned supra. When the learned D.R. was required to explain the reason as to why six applications have been filed. It was stated that later three applications have been mistakenly filed by the department against one and the same order and permission was sought to withdraw. those applications reason being myth of all the six applications is the same. This contention of the learned D.R. was found correct. Accordingly, later three applications bearing M.As. Nos. 331, 332 and 333/LB/03 are dismissed on account of being infructuous.

3. What happened in this case was that the assessee-defendant was owner of a property namely Jalil Centre which was offered for charge of wealth tax. The Assessing Officer, on assessment, assessed its value under the status of "individual" by passing the order under section 16(3) of the Wealth Tax Act. Subsequently, the Inspecting Additional Commissioner of Income Tax/Wealth Tax (IAC) modified those assessments in terms of section 17(b) of the Wealth Tax Act. The Assessing Officer was accordingly directed by the IAC to assess aforesaid property in the status of AOP (Association of Persons). On reassessment the Assessing Officer assigned status of A.O.P. for the purposes of valuation of this property. At the stage of first appeal, the assessee's plea of assigning status to asses this property to be that of "Individual" was accepted as a result thereof, the Assessing Officer was directed to asses valuation of this property in the hands of each individual owners instead of AOP. When the order passed by the first appellate authority was assailed by the department in appeal before the Tribunal, the Assessing Officer's order of assigning status of an "AOP" was restored by it. Resultantly, the impugned appellate order was vacated.

4. Against this order, the appeals were filed before the honourable Lahore High Court Lahore raising three questions of law said to have arisen out of the Tribunal's order, dated supra. On 14-3-2002, the assessee's appeals were dismissed by the High Court Lahore (at Multan Bench) holding the property to be the joint and is not owned separately by its owner in their individual capacity and as such is not divisible. To arrive at this decision, it was observed that the questions posed were purely and simply related to factual controversy which cannot be considered by the High Court. Felt aggrieved by this verdict, the assessee knocked the doors of august Supreme Court of Pakistan. It was accordingly observed that factual controversy whether the disputed property could be treated in individual capacity or it had got the status of AOP had been determined by the Tribunal. Hence, the impugned judgment of the learned Division Bench of the Lahore High Court in dismissing the appeal of the petitioner was declared to be unexceptionable as under section 27 of the Act, interference can only be made on question of law and not otherwise. This judgment has been rendered by the apex Court of Pakistan on 14-5-2002 which is reported in Tax law journal in re: 2003 PTD 647.

5. Thereafter, the assessee-respondent moved miscellaneous application requesting the Tribunal to recall its original order, dated 31-10-2000 on the ground that the documents/the material which was placed before the Tribunal to determine status of the aforesaid property to be assessed in the individual hands or the AOP escaped consideration by the Bench. Reference in this regard was made to the gift deed, dated21-4-1992, whereby the shares in the property had been divided in favour of the legal heirs according to the map incorporated in the gift deed. Besides, reference was also made to PT-1 form issued in the year, 2000-2001, bills of electricity meters in the name of each owner, separate rent deeds and certificate of Municipal Engineer of Multan Corporation was made. In addition to, the order passed by the Member Judicial, C.B.R was also referred to, wherein for the assessment year 1992-93 direction was given to asses the said property in the status of an "individual" instead of "AOP".

6. Ultimately the Tribunal, after considering the evidence available on the record, rectified its earlier order, dated 31-10-2000 in terms of section 35 of the Wealth Tax Act vide M.As. Nos.959 to 961/LB of 2002, dated 27-1-2003 as the material evidence to asses status of the said property to be an "AOP" or an "individual" could not be taken into consideration at the time of delivering the judgment. Consequent upon which the appeals were restored to their original numbers and the Assistant Registrar (Roster) was directed to enlist the appeals for re-hearing. On rehearing the Tribunal, upon having appreciated the material available on record, came to the conclusion to restore the Appeal Commissioner's order whereby status assigned by him as that of an "individual" was maintained in all the years under consideration. This has compelled the Revenue to file miscellaneous applications requesting the Tribunal to cancel the order passed by it on rehearing on 27-10-2003.

7. Main thrust of the miscellaneous application is that since, in the instant case, not only the apex Court of Pakistan but also the Lahore High Court Lahore had maintained the Tribunal's order, dated 31-10-2000, rendered at the first place, wherein status assigned by the Assessing Officer to assess valuation of the property on the basis of an "AOP" was restored in the departmental appeal, thus, the Tribunal was not vested with jurisdiction to recall its earlier order dated supra. Although the assessee-respondent did not bring in the notice of the Bench regarding passing of the order by the Higher Appellate Courts in the present case, nevertheless, this contention of the department is misplaced. Reason being the appeals were dismissed by the two higher appellate authorities on the ground that no question of law arose from the Tribunal's order rather the questions posed were purely and simply revolved around factual controversy. In this background they declined to intervene in the Tribunal's order which was passed originally on 31-10-2000. While refusing to grant leave to appeal it was observed by the apex Court of Pakistan that the controversy whether the disputed property could be treated in "individual capacity" or it had got the status of "AOP" is a question of fact and interference can only be made on question of law.

8. Refusal to grant permission to admit the proposed question of law by the two higher appellate Courts does not mean that the powers to rectify the order by the Tribunal in terms of section 35 of the Wealth Tax Act, 1963 has been diluted. We cannot subscribe to this view because in hierarchy of Income Tax law, the Appellate. Tribunal is the final fact finding body; its decision on question of fact is not liable to be questioned before the High Court or the apex Court of Pakistan. In fact the Appellate Tribunal is a Court of appeal of fact as well as law and it can interfere with its order but can do so only on judicial consideration and on the basis of reasons that suggest clearly that it had committed an error of law or such fact that had vitiated its considerations and gone perverse for such reasons. The Tribunal is certainly not empowered to imply its jurisdiction arbitrarily. Whatever it does, must be done in consonance with sound judicial principles and in accordance with well accepted doctrines applicable to judicial bodies. It must maintain judicial balance between the claims of the public Revenue and the tax payer.

9. Being the final authority on question of fact, the Tribunal in deciding an appeal is bound to consider all the evidence and the arguments raised by the parties. It is not enough that the Tribunal merely records a bare conclusion without setting out any reason in support thereof. If the Tribunal has done so, it could not be assumed that in so recording the conclusion the Tribunal had considered the evidence. The Tribunal has to act judicially in the sense that it has to consider with due care all material facts and evidence in favour and against the assessee and record its finding on all the contentions raised by the assessee or the Commissioner, as the case may be, in the light of the evidence and the relevant law.

10. Under section 35 of the Wealth Tax Act, 1963 there is no ambiguity to the factum that a mistake capable of being rectified is not confined to clerical or arithmetical mistake. On the other hand it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. The phrase used in this section "any mistake apparent from the record" comprehends error which, after a judicious probe into the record from which it is supposed to emanate, are c discerned. Mistake is mostly subjective and the dividing line in border area is thin and indiscernible. It is something which is a duly and judiciously instructed mind can find out from the record. Mistake may be either of law or of fact can be rectified. It, however depends on the facts and circumstances of each case. If an obvious error, a lurking mistake or an omission leading to a mistake is discovered from a record, it can be and ought to be corrected and rectified. If it relates to a fact it should be possible to say "this is obviously a mistake". When an earlier order passed by an authority is founded on a mistaken assumption and the error is discovered, the power under section 35 can be resorted to because the very basis of the earlier order requires rectification.

11. There is no denying the fact that the Tribunal is the last fact finding Court. Meaning thereby on factual controversy this Tribunal is empowered to rectify its order provided material of primary importance, which was placed on record, has escaped consideration. Had there been any question of law involved and the higher appellate Court would have answered that question against the assessee-respondent, the Tribunal would have certainly become functus officio to rectify its order. Section 35 of the Wealth Tax Act, without any uncertainty of meaning, confers jurisdiction not only upon the Wealth Tax Officer, the Appellate Assistant Commissioner, the Commissioner but also the Appellate Tribunal to rectify his/its order if any mistake apparent from the 'record either on his, or its own motion or any such mistake which has been brought to the notice of the said authorities as the case may be. However, a clog has been put on the powers of the Tribunal where as a result of rectification, enhancement in assessment shall occur, no such rectification shall be made without giving a reasonable opportunity of being heard to the assessee. A limit of time has also been provided in subsection (4) of this section whereby rectification of the order can be sought. This subsection has provided that no rectification of mistake shall be made at any time within four years from the date of any order passed by the Tax Authorities mentioned ante.

12. When viewed in the perspective of foregoing discussion, the Tribunal has not transgressed its power while rectifying its earlier order, dated 14-3-2000 in terms of section 35 of the Wealth Tax Act in particular when the material evidences, which were brought on record at the time of hearing of the appeal, escaped consideration when the judgment was rendered. Admittedly the whole tenor of the judgments of the higher authorities suggests dismissal of questions of law proposed in appeals. Thus in this backdrop neither the judgment of apex Court of Pakistan nor that of the High Court would create any hindrance in the way of the Tribunal, the Commissioner, the Appellate Assistant Commissioner and the Wealth Tax Officer that it/he cannot rectify its/his order where factual controversy has been brought to the notice of the said authorities. It would certainly create an absurd situation if it is to be held that the hands of the said authorities are tied up to rectify their order where in a case factual controversy has been cropped up therein and such mistake has also been brought to their notice. Interpreting section 35 of the Act in this way would mean negation of this very section which cannot be allowed to go section 35 of the Act has extended wide powers to the said authorities that if they, after examination of the record, find out that mistake of law or fact has been crept in their orders f they can suo motu rectify such orders. We therefore, have no ambiguity in our mind that in such eventuality this Tribunal is vested with the powers to rectify its order on factual premises. That is why the legislature in its wisdom has conferred jurisdiction not only upon the Tribunal but also on the other tax authorities such as Commissioner, the Appellate Assistant Commissioner and the Wealth Tax Officer to rectify the mistake, which is apparent from the record and has been brought to its notice or on its own motion, reason being if there is a factual controversy that ought to be rectified at the appellate Tribunal level or the Authorities referred to ante. This was what the Tribunal by exercising the powers conferred under section 35 of the Act had rectified its earlier order, dated 31-10-2000 after having found that material of primary importance which was placed on record had escaped consideration by the Bench.

13. In the given scenario we have no other alternative but to dismiss the miscellaneous applications being bereft of any merits and it is so ordered. The departmental applications are hereby disposed of.

H.B.T./450/Tax (Trib.)???????????????????????????????????????????????? Applications dismissed.