W.T.As. Nos. 68/KB to 83/KB of 2005, decided on 23rd February, 2006. VS W.T.As. Nos. 68/KB to 83/KB of 2005, decided on 23rd February, 2006., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2843 (2006)

Wealth Tax Act (XV of 1963)---

----Ss. 35, 16(2) & 17-B---Rectification of mistake---Finalization of assessment by Taxation Officer---First Appellate Authority rectified his order on the ground that issue of jurisdiction was not discussed, assessment finalized by the Taxation Officer was without lawful jurisdiction and ab initio void as the authority of the Taxation Officer was not listed in the wealth tax law, as such assessments made by the Assessing Officer in the capacity of Taxation Officer were not legally maintainable same were cancelled---Validity---Assessing Officer, who was the Taxation Officer as per Income Tax Ordinance, 2001 had been authorized to exercise powers under the Wealth Tax Act, 1963 as "Deputy Commissioner of Wealth Tax"---Person who exercised the jurisdiction had, at a particular time an absolute authority to pass wealth tax assessment orders---In the body of the order in the end only the words "Taxation Officer" of income tax had been written, contrary to this, all the proceedings had been carried out under the provisions of Wealth Tax Act, 1963---Order had been passed by invoking S.16(5)/17-B of the Wealth Tax Act, 1963---Missing of the words "Wealth Tax Officer" was a mistake not fatal and the nature of the mistake was such that it could not vitiate the proceedings---Words "Deputy Commissioner of Wealth Tax" if not written at the end of the assessment order along with the words "Taxation Officer" would not render the proceedings void ab initio in case the order was passed by the person having absolute power under the law; it was a typographical mistake not fatal in nature to vitiate the proceedings---Appeal of the Department was allowed and order of the First Appellate Authority was annulled.

2005 PTD (Trib.) 2062; 1999 PTD (Trib.) 4026 and 1997 PTD 821 distinguished.

Agha Hidayatullah, D.R. for Appellant.

Mehtab Khan for Respondent.

ORDER

The Department, being aggrieved and dissatisfied from the order, dated 13-6-2005, has taken common objections in all the appeals captioned above, referred hereunder:

(1) The learned Commissioner of Income Tax (Appeals) Hyderabad was not justified to cancel the assessments of wealth completed in all the above cases under sections 16(5)/17-B of Wealth Tax Act, pertaining to years 1985-86 to 2000-2001 while deciding the rectification application filed by the assessee.

(2) The learned CIT(Appeals) was not justified to cancel the assessment, on the ground that words "Taxation Officer" is not been listed in the Wealth Tax Act and the assessments made by the Assessing Officer in the capacity of Taxation Officer are not legally maintainable.

2. The assessee furnished Wealth Tax returns for all the years at Circle-07, Zone. 18, Islamabad, the wealth tax officer assessed the wealth and allowed exemption of Special Saving Certificates/Special Saving Account. The IAC modified the order taking suo motu action holding that the assessments have been finalized by the Assessing Officer, Circle-07, Islamabad without having lawful jurisdiction over the case and that the orders being without jurisdiction are erroneous and prejudicial to the interest of Revenue. In pursuance to cancellation orders under section 17-B of the Wealth Tax Act, 1963 the matters appear to have been transferred to Circle Nawabshah. Zone, Hyderabad, where Assessing Officer concerned issued various notices under section 16(2) tint assessee failed to comply with the notices. The Assessing Officer finalized the assessments under section 16(5) read with section 17-B of the Wealth Tax Act, 1963 for all the years and withdrew the exemption of Special Saving Certificates/Special Saving Account subject to rectification under section 35. Being aggrieved by the treatment, the assessee preferred appeals. The CIT(A) Hyderabad Zone vide consolidated order, dated 22-3-2005 disallowed the appeals observing hereunder:--

"The use record further reveals that while finalizing the assessment ex pane, Assessing Officer has afforded a lot of opportunities of being heard to the appellant but he failed to attend the hearing so fixed from time to time. Thus the action of the Assessing Officer to finalize the assessments for all the years ex parte under section 16(5) read with section 17-B of Wealth Tax Act, 1963 are maintainable in the eyes of law as the Assessing Officer to finalize the assessments held that "the assessee has declared Special Saving Certificate/Special Saving. A/c claimed to have been exempt from levy of Wealth Tax. Moreover evidence of Zakat deduction thereupon has not been filed, hence the claim of exemption was disallowed, subject to rectification under section 35 of Wealth Tax Act, 1963 on production of any evidence." Keeping in view of above discussion it appears that the Assessing Officer himself accorded opportunity to the appellant that the assessments were subject to rectification under section 35 of Wealth Tax Act, 1963, therefore, the orders passed for all the years are hereby confirmed.

The appeals being devoid of any merits are dismissed."

3. The assessee filed Rectification Applications being dissatisfied from the order, dated 22-3-2005 for the reasons that, the learned taxation officer has no authority under the Wealth Tax Act, the learned taxation officer was not justified to pass an order when the appeal against the order of the learned IAC was pending before the Income Tax Appellate Tribunal and more particularly when the learned IAC passing order under section 17-B has not directed the taxation officer to pass any order consequent to order under section 17-B, the order, dated 23-7-2004 has been passed without issuing notice under section 16, the decision in the appellate order is purely the confirmation of action of the taxation officer under section 16(5) which was not taken in the grounds of appeal, as such the mistakes in the appellate order are apparent from the face and from the record, thus liable to be rectified under section 35 of the repealed Wealth Tax Act.

4. The learned CIT(A) Hyderabad cancelled the order observing that mistake is apparent from the record. The issue of jurisdiction was not discussed, assessments finalized by the Taxation Officer are without lawful jurisdiction and ab initio void, the authority of the taxation officer is not listed in the wealth tax law and the case-law cited is irrelevant in the assessee's case, as such the assessments made by the Assessing Officer in the capacity of the taxation officer are not legally maintainable. The ratio of the order is hereunder: --

"It is therefore directed that the last sentence of the Appellate Order, dated 22-3-2005 i.e. keeping in view of above discussion it appears that the Assessing Officer himself accorded opportunity to the appellant that the assessments were subjected to rectification under section 35 of Wealth Tax Act, 1963, .therefore, the orders passed for all the years are hereby confirmed."

"Respectfully following the orders of the Honourable Income Tax Appellate Tribunal as referred to above the orders passed by the "Taxation Officer of Income Tax" for the years under appeal are without lawful Authority and are hereby cancelled."

5. We have heard the learned representatives of the two parties at length and have gone through the record, the CIT(A) has allowed the rectification as Assessing Officer himself afforded opportunity of rectification, but this opportunity was allowed by the Assessing Officer itself subject to production of evidence, hence CIT(A) has endorsed the order of the Assessing Officer once again. In fact CIT(A) has taken wrong view of the situation of the purpose of rectification although there appears no apparent fault in the order the only ,argument, which now .requires discussion is regarding he authority of the taxation officer under the Wealth Tax Act, to pass order under section 16.

6. The learned D.R. vehemently argued that rectification of the order, dated 22-3-2005 has been allowed for the mere reason that the assessments finalized by the taxation officer for the assessment years 1985-86 to 2000-2001 are without lawful jurisdiction and ab initio illegal as the authority of the taxation officer is not listed in the Wealth Tax Law, whereas the assessment order has been passed by the person competent to pass the assessment order under the Wealth Tax Act, 1963 and due to typographical mistake he has written the words "Taxation Officer of Income Tax" and has omitted the words "Deputy Commissioner of Wealth Tax", although the assessment order has been passed under sections 16(5)/17-B of the Wealth Tax Act, 1963 notices have been issued and served under various provisions of Wealth Tax Act and demand note also refer section 30 of the Wealth Tax Act, 1963.

7. The learned A.R. namely Mr. Mehtab Khan apposed the arguments (sic) that the taxation officer has no authority under the Wealth Tax Act. It is the term introduced through Income Tax Ordinance, 2001 to exercise powers in place of Assessing Officer and nothing to do with the term "Deputy Commissioner Wealth Tax" empowered to act as Assessing Officer under Wealth Tax Act, 1963 as such the Taxation Officer was not justified to pass assessment order. It is added that at the very moment appeal against the order of the learned IAC was pending before the ITAT, no notice under section 16 of the repealed Act was served on the assessee. The decision in the appellate order does not reflect the grounds of appeal and that mistake was apparent on the face of the order of the learned CIT(A), dated 22-3-2005.

8. We have gone through the record in view of the arguments of the learned representatives of the two parties. Admittedly Mr. Javed Akhtar Dareshani, who is the taxation officer as per Income Tax Ordinance, 2001 has been authorized to exercise powers under the Wealth Tax Act as "Deputy Commissioner of Wealth Tax", hence the person who exercised the jurisdiction has, at a particular time an absolute authority to pass wealth tax assessment orders the only controversy then left is that in the body of the order in the end only the words "taxation Officer" of income tax have been written. Contrary to this all the proceedings have been carried out under the provisions of Wealth Tax Act, order has been passed invoking sections 16(5)/17-B of Wealth Tax Act, 1963, all notices including demand notice refers sections of Wealth Tax Act, 1963, hence missing of the words "Wealth Tax Officer" is a mistake not fatal, and the nature of the mistake is such that it may not vitiate the proceedings.

9. Unfortunately the appellate orders, dated 22-3-2005 and 13-6-2005, are also passed by the Commissioner of Income Tax with no reference to authority of the Commissioner under Wealth Tax Ordinance. For the sake of arguments, if it is presumed that for this reason the assessment order is without jurisdiction, hence the appellate order and order rectifying the appellate order would also be of no consequence being without jurisdiction. The counsel for the assessee has relied upon the case-law reported as 2005 PTD (Trib.) 2062. The ratio of the order of the above cited case is hereunder:

"Ss. 35 Sc 45-A---Income Tax Ordinance, (XXXI of 1979), S.134---Assessment, annulment of---Appeal to Income Tax Appellate Tribunal---Assessment proceedings were finalized by Taxing Officer whereas it had to be taken up and decided by Wealth Tax Officer---Wealth tax assessment and income tax assessment were governed separately under Wealth Tax Act, 1963 and Income Tax Ordinance, 1979 respectively---Wealth tax assessments could not be taken up or finalized by the Taxation Officer---Assessee had come in appeal against the Income Tax Officer before Commissioner Wealth Tax (Appeal) with additional ground that assessment made by Taxation Officer was illegal, without jurisdiction, void ab intio and liable to annulment-Commissioner Wealth Tax annulled assessment---Revenue was unable to point out any flaw in order of first Appellate Authority---Order of Commissioner Wealth Tax being legal was upheld."

10. In this case the assessment proceedings were finalized by the Taxation Officer whereas it has to be taken up and decided by the Wealth Tax Officer. Wealth tax assessment and income tax assessment are governed separately under the Wealth Tax Act, 1963 and Income Tax Ordinance, 1979 respectively. Wealth tax assessments cannot be taken up or finalized by the Taxation Officer. Against the action of the Taxation Officer, the assessee has come in appeal before the CWT(A) with the additional ground that assessment made by the Taxation Officer is illegal, out of jurisdiction, void ab initio and liable to annulment. The CWT(A) annulled the assessment following the ratio of case-law reported as 1999 PTD (Trib.) 4026 and 1997 PTD 821".

11. In fact the case-law relied upon in the present order viz. 1999 PTD (Trib.) 4026 = 1997 PTD 821 is altogether on different facts. In this case the Assistant Commissioner of Wealth Tax had no jurisdiction at all to pass the assessment order but recorded the assessment order and since the assessment could be made by Deputy Commissioner of Wealth Tax only in view of section 16 and Assistant Commissioner of Wealth Tax having not been listed as the Wealth Tax Authority under section 8 of the Act, the assessment recorded was declared as illegal and void. In our considered opinion, the ratio of the case reported as 1999 PTD (Trib.) 4026 is neither helpful to assessee nor relevant in case reported as 2005 PTD (Trib.) 2062 as in the matter under appeal order has not been passed by the Assistant Commissioner but by a person exercising authority under two different laws as Taxation Officer Income Tax under Income Tax Ordinance and Deputy Commissioner of Wealth Tax under Wealth Tax Act, 1963.

12. It is worth-mentioning that case-law reported as 1999 PTD (Trib.) 4026 cannot be relied upon any more as after this order amendments appear to have been brought up in the definition of Deputy Commissioner and vide clause (hhh) of section 2 of the Wealth Tax Act, the Deputy Commissioner has been defined as a person appointed to act as Deputy Commissioner of Wealth Tax, under section 9 and includes an Assistant Commissioner of Wealth Tax. Wealth Tax Officer. Special Officer and Recovery Officer in the circumstances supra, the case-law reported as 1999 PTD (Trib.) 4026 has no impact after the amendment in definition of the Deputy Commissioner brought up in the year, 1999. In the same circumstances, it is again unsafe to rely upon the case-laws reported as 2000 PTD (Trib.) 2062 which is based on case-law reported as 1999 PTD 4026 which has lost its entire impact and effect due to amendment in the law. The other arguments have no legal weight, besides being beyond the scope of rectification, hence same are accordingly rejected.

13. As a result of above discussion we are not in agreement with the reasons recorded by the learned Commissioner of Wealth Tax to rectify the order and hold that the words "Deputy Commissioner of Wealth Tax" if not written, at the end of assessment order along with the words "Taxation Officer" would not make the proceedings void ab initio, in case the order is passed by the person having absolute power under the law. We further hold that it is a typographical mistake not fatal in nature to vitiate the proceedings. In the circumstances supra, we find sufficient reasons to allow the appeals on the instance of the Department where by the order, dated 13-6-2005 is annulled. In consequence thereof order of the Commissioner of Wealth Tax, dated 22-3-2005 will hold field.

14. Order accordingly.

C.M.A./141/Tax (Trib.)Appeal allowed.