W.T.As. Nos. 880/LB to 882/LB of 2004, 757/LB to 759/LB of 2004, decided on 28th June, 2005. VS W.T.As. Nos. 880/LB to 882/LB of 2004, 757/LB to 759/LB of 2004, decided on 28th June, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 991 (2005)

Wealth Tax Act (XV of 1963)---

----Ss.17 & 17B---Wealth escaping assessment---Reopening of assessment under S.17B of the Wealth Tax Act, 1963 by the Assessing Officer---Validity---Assessee was issued a show-cause notice under S.17B of the Wealth Tax Act, 1963 and the Inspecting Additional Commissioner also granted permission to reopen the assessments under S.17B of the Wealth Tax Act, 1963---Section 17B of the Wealth Tax Act, 1963 dealt with the powers of Inspecting Additional Commissioner to revise the wealth tax officer's order---Assessments could be reopened under S.17 of the Wealth Tax Act, 1963 and not under S.17B thereof---Super-structure built on wrong foundation had to fall down---Assessments were reopened under a wrong section which spoke incompetence and lack of knowledge of the wealth tax authorities handling the case---Though a definite information was available with the Assessing Officer to initiate the proceedings under S.17(1) of the Wealth Tax Act, 1963 but record revealed that the show-cause notice issued to the assessee clearly indicated the intention of the Assessing Officer to reopen assessment under S.17B of the Wealth Tax Act, 1963 and permission had been granted by the Inspecting Additional Commissioner under S.17B of the Wealth Tax Act, 1963---Contention of Department that wrong ticking of the section will not vitiate the assessment proceedings was not convincing---Assessments based on the notices issued under wrong section of law were illegal and could not be endorsed---Orders of Assessing Officer and First Appellate Authority were vacated by the Appellate Tribunal with the observation that department, was at liberty to initiate action as provided under law to tax the untaxed value of six Kanals of land.

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

Sh. Zafar ul Islam for Respondent.

Date of hearing: 28th June, 2005.

ORDER

These cross-appeals have been filed for the assessment years 1994-95 to 1996-97 against the consolidated order dated 13-7-2004 passed by C.I.T.(A). The department is agitating the reduction in rate of land per Marla from Rs.18,000 to Rs.7,000 adopted for valuation of plot in all the three years under appeal. The assessee is agitating the upholding of issuance of wrong and illegal notices non-adjudication of ex parte assessment, valuation of six Kanal of land @ Rs.7,000 per Marla and on other grounds as per memo. of appeal.

2. The appeals of the assessee have been filed on 20-10-2004 and are late by thirty three days. The assessee has requested for the condonation of delay in filing of appeals as per memo. of appeal and at the time of hearing of appeal, the A.R. of the assessee pleaded for the condonation of delay on the ground that the assessee is an old person of over 70 years of age and remained seriously ill during this period and assessee could not file the appeal in time it was stated that the assessee is suffering from Epilepsy, Hemiplegia and multiple complaints of body and the assessee was advised rest by the doctor for two months from 19-7-2004. The A.R. of the assessee also produced medical certificate of medical offieer, Tehsil Headquarter Hospital Jehania along with medical prescription in support of his contention. The request of the A.R. of the assessee for condonation of delay in filing of appeals has been considered and is accepted being supported by the evidence. The delay of thirty' three days in filing of appeals by the assessee is condoned.

3. Facts of the case reveal that in the original assessment framed under section 16(3) of the Income Tax Ordinance, 1979, a plot of land measuring two Kanals three Marla at Chak No.110/10-R, Jehania was valued at Rs.774,000 in all the three years under appeal @ Rs.18,000 per Marla notified by the District Collector. In appeal the C.I.T.(A) confirmed the adopted value. However, in view of contention of the A.R. of the assessee that the value of this property shown at Rs.1,50,000 was included in the declared capital and thus has been taxed twice directed that the amount of Rs.1,50,000 may be excluded from the capital of Messrs Saeed Oil Mills after verification from the record prior to giving appeal effect, the Assessing Officer issued a show-cause notice under section 17(B) of the Wealth Tax Act, 1963 for the assessment years 1994-95 to 1996-97. The relevant para of this notice is reproduced as under:---

"Scrutiny of documents appended with your return reveals that the land/Oil Mill consists on 8 Kanals 3 Marlas vide purchase deed dated 19-7-1992 and 2-4-1987. Actual value of the said land as per D.C. Schedule @ 18,000 per Marla comes to Rs.2,934,000. Being sole purchaser you were the only the owner of this land. Under assessment of the said land attracts to apply the provision of section 17(B) of the Wealth Tax Act, 1963."

The assessments for the three years were reopened with the prior permission of the I.A.C. under section 17(B) of the Wealth Tax Act, 1963. Due to non-compliance of the notices issued under section 16(2) the assessments were completed ex parte under sections 16(5)/17(1)(a) of the Wealth Tax Act, 1963, wherein the value of plot measuring 8 Kanals 3 Marlas was adopted at Rs.21,60,000 for all the three years under appeal @ Rs. 18,000 per Marla as notified by District Collector. Thus the value of six Kanals of land not assessed in the order passed under section 16(3) was assessed to tax under sections 16(5)/17(1)(a) of the Wealth Tax Act. 1963. In appeal before the C.I.T.(A) the A.R. of the assessee objected to the reopening of the assessment under section 17(B) of the Wealth Tax Act, 1963. The C.I.T.(A) observed that wrong mentioning of section due to typing mistake does not vitiate the whole proceeding and rejected the plea of the assessee. However, the C.I.T.(A) observed that per Marla industrial rate should have been applied instead of per Marla rate of Rs.18,000 and directed the Assessing Officer to apply rate per Marla of Rs.7,000 in all the years under appeal on the remaining six Kanals of land assessed to tax under sections 16(5)/17(1)(a).

4. The A.R. of the assessee contended that the proceedings initiated under section 17(B) of the Wealth Tax Act, 1963 are illegal and the I.A.C. also granted permission to reopen the assessment under section 17(B) of the Wealth Tax Act, 1963. It was argued by the A.R. of the assessee that section 17(B) of the Wealth Tax Act, 1963 empowers the I.A.C. to examine the record of any proceedings and if he considers that any order passed therein by the Assessing Officer is erroneous in so for as it is prejudicial to the interest of Revenue, may after giving the assessee an opportunity of being heard, pass an order thereon as the circumstances of the case justify. It was further argued by the A.R. that issuance of notice under section 17(B) permission by I.A.C. to reopen the assessment under section 17(B) and of the Wealth Tax Act, 1963 for all these years under appeal is contrary to the provisions of law. A copy of the permission letter issued by the I.A.C. was also produced which shows that the permission to reopen the assessment for all these years was accorded under section 17(B) of the Wealth Tax Act, 1963. The C.I.T.(A) in its order dated 13-7-2004 has held that the wrong mention of section due to typing mistake does not vitiate the assessment proceedings. The A.R. of the assessee submitted that this is not a typing mistake but a mistake which has been committed by the Assessing Authorities vitiating the whole proceedings. The A.R. further stated that no prior approval of the 1.A.C. as required under the law has been obtained but rather a permission has been obtained to reopen the assessments and that superior Courts in various reported decisions have held that the permission is different from the approval and cases reopened without approval of I.A.C. cannot be held to have been reopened in accordance with the legal provisions.

5. We have considered the arguments of both sides and have also gone through the relevant record available on file. It is evident from record that the assessee was issued a show-cause notice under section 17(B) of the Wealth Tax Act, 1963 and the I.A.C. also granted permission to reopen the assessments for all these years under section 17(B) of the Wealth Tax Act, 1963. Section 17(,3) deals with the powers of I.A.C. to revise the Wealth Tax Officer order. The assessments can be reopened under section 17 of the Wealth Tax Act, A 1963 and not under section 17(B) of the Wealth Tax Act, 1963. The superstructure built on wrong foundation has to fall down. The assessments in this case were reopened under a wrong section which speaks of incompetence and lack of knowledge of the wealth tax authorities handling the case. Though a definite information was available with the Assessing Officer to initiate the proceedings under section 17(1) of the Wealth tax Act, 1963 but record reveals that the show-cause notice issued to the assessee clearly indicated the intention of the Assessing Officer to reopen assessment under section 17(B) of the Wealth Tax Act, 1963 and permission has been granted by I.A.C. under section 17(B) of the Wealth Tax Act, 1963. The contention of the Departmental Representative that wrong ticking of the section will not vitiate the assessment proceedings is not convincing. The assessments A based on the notices issued under wrong section of law are illegal and cannot be endorsed. We, therefore, vacate the orders of Assessing Officer and C.I.T.(A) dated 13-7-2004. The department is at liberty to initiate action as provided under the law to tax the untaxed value of six Kanals of land. Since the orders of both the authorities below have been vacated, we need not adjudicate the other issues raised by the assessee as well as by the Department.

6. All the cross-appeals are decided as above.

C.M.A./489/Tax(Trib.)???????????????????????????????????????????????????????????? Order accordingly.