W.T.As. Nos. 365/LB to 367/LB of 2004, decided on 31st December, 2004. VS W.T.As. Nos. 365/LB to 367/LB of 2004, decided on 31st December, 2004., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 995 (2004)

Wealth Tax Act (XV of 1963)---

----S.14C---Income Tax Ordinance (XXXI of 1979), S.53---Tax on ownership of certain immovable assets---Minimum wealth tax---Advance tax---Assessee was an individual and filed property survey during the survey campaign declaring a property---Assessing Officer being of the view that assessee was liable to pay minimum wealth tax under S.14C of the Wealth Tax Act, 1963, proceeded to impose wealth tax along with additional tax after issuance of a show-cause notice---Validity---Assessing Officer as well as First Appellate Authority erred in law while levying tax under S.14C of the Wealth Tax Act, 1963---Provisions of S.14C of the Wealth Tax Act, 1963 as well as S.53 of the Income Tax Ordinance, 1979 were part materia and postulated similar situation i.e. - payment of advance tax---Orders passed under S.14C of Wealth Tax Act, 1963 were cancelled and appeals filed by the assessee were allowed by the Appellate Tribunal.

(1992) 66 Tax 140; 2000 PTD 2433 (Trib.); 2003 PTD 319 (Trib.) and (2001) 83 Tax 1919 rel.

Monim sultan for Appellant.

Abdul Rasheed, D.R. for Respondent.

Date of hearing: 30th November, 2004.

ORDER

The captioned three wealth tax appeals at the behest of the assessee, pertaining to the assessment years 1998-99, 1999-2000 and 2000-2001 have been directed against the combined impugned order dated 22-11-2003 passed by the learned C.W.T.(A) Zone v. Lahore. The following grounds have been urged at the Bar by the learned counsel for the assessee:

(1) That the learned C.I.T.(A) erred in law in upholding the assessment framed by the learned Special Officer.

(2) That the order under sections 14-C/31-BBB is arbitrary, against law and contrary to the facts of the case. The order is unfounded.

(3) That the order is prima facie illegal, the issuance of show-cause and subsequent proceedings are arbitrary against law and contrary to the facts of the case.

(4) That without prejudice to the above the invoking of the provisions of section 14-C for framing the assessment and determining the tax demand are arbitrary, against law and contrary to the facts of the case.

(5) That without prejudice to the above the minimum wealth tax along with the additional tax charged are arbitrary, against law and contrary to the facts of the case.

(6) That without prejudice to the above the determining of tax payable under section 14-C at Rs.10,779 and imposing the additional tax under section 31-BBB are arbitrary against law and contrary to the facts of the case such treatment is devoid of legal sanctity.

2. Since the grounds adopted by the appellant are common for all the assessment years, we intend to adjudicate upon the same through this consolidated order.

3. The facts in brief relevant for the disposal of the present appeals as divulged from the impugned order are that the assessee/appellant who is an individual filed property survey during the survey campaign declaring Property No.19/1 Amjad Khurshid Road, Lahore Cantt. Measuring total area of 970 sq. ft. The Assessing Officer was of the view that the appellant was liable to pay minimum wealth tax A under section 14-C of the repealed Wealth Tax Act, 1963 (hereinafter called the repealed Act). After issuance of a show-cause notice which has been incorporated in the body of the assessment order, the Assessing Officer proceeded to impose wealth tax along with additional tax under section 31 of the repealed Act in the following manner:---

Amount of minimum taxpayable1998-99?????????? 1999-00?????????? 2000-01

under section 14C??????????????????????????????? 10,779???????????? 10,779???????????? 10,779

Amount of Additional Tax under?????????? 3,234?????????????? 3,234?????????????? 3,234

section 31-BBB

4. Feeling aggrieved by the assessment order, the assessee approached the learned First Appellate Authority who vide order dated 22-11-2003 upheld the impugned assessment. The assessee/appellant is in further appeal before us seeking the reversal of the same.

5. Mr. Monim Sultan, Advocate appeared on behalf of the assessee while Mr. Abdul Rashid, D.R. represented the case of the department. Both of them have been heard.

6. Right at the outset, the impugned order was assailed by the learned A.R. on legal premises. It was argued by the learned A.R. for the assessee that the Assessing Officer erred in law while creating charge on the basis of section 14C of the repealed Act, since it was not a charging section. He further elaborated that the aforesaid provision of law envisages an advance tax payable by the assessees who owned property as mentioned in section 14(1)(d) of the repealed Act. Further submitted that advance tax contemplated by section 14(1)(C) is not a final discharge of wealth tax liability, rather the same is adjustable against the final liability to be determined after taking into account the tax liability on the basis of net wealth.

7. The learned A.R. took us to section 14(1)(C) of the repealed Act. In order to substantiate his contention, the learned A.R. also drew strength from judgments reported as (1992) 66 Tax 140 (S.C. Pak.), 2000 PTD 2433 (Trib.) and 2003 PTD 319 (Trib.).

8. The learned D.R. on the contrary has supported the assessment framed by the Assessing Officer and confirmation thereof by the learned First Appellate Authority.

9. We have heard the rival arguments tendered at the Bar as well as the case-law cited in support thereof.

10. Before we embark upon adjudicating the issue sub judice before us, it would be in fitness of this to reproduce section 14(1)(c) of the repealed Act.

"14C. Tax on ownership?????????? of???????? certain immovable???????? assets.---(1) Notwithstanding anything contained in this Act, every person who owns an immovable asset referred to in clause (d) of subsection (1) of the section 14 shall pay wealth tax at the rates specified in paragraph B of Part-II of the First Sched:

Provided that nothing contained in this subsection shall apply to widows, orphans below the age of twenty-five years, pensioners and disabled persons.

(2) The tax under this section payable by way of advance tax in accordance with the provisions of sections 13A and 13D, shall be deemed to be the minimum amount of tax payable under this section and where the final tax liability determined under this Act exceeds the amount paid, if any, under the aforesaid provisions, the amount so paid shall be adjustable against the final tax liability of the assessee."

11. Bare perusal of the aforesaid provisions of law clearly evinces that the tax envisaged under section 14C is an advance tax which is to be adjusted against the tax, when the final liability of the assessee is determined. Further reading of the (supra) section will make it abundantly clear that it is a non-obstante clause of the repealed Act and the owner of the particular class of immovable assets has been made liable to pay the tax in advance for which the return is required to be filed vis-a-vis assessment is to be made. At this juncture it would be appropriate to refer to the judgments relied upon by the learned A.R. for the assessee in support of his contentions. The two judgments which have been cited at the Bar by the learned A.R. for the assessee are reported as 2000 PTD (Trib.) 2433 and 2000 PTD (Trib.) 319. Ratio in the (supra) judicial pronouncements is that the tax under section 14C is an advance tax which would be reckoned for calculation of final tax liability in order to determine net wealth. It is also worth-mentioning that the august Supreme Court of Pakistan in reported judgment (1992) 66 Tax 140 (SC Pak.) in respect of advance tax under section 18A of the erstwhile Act, 1922 has held that the amount payable under section 18A of the erstwhile Act, 1922 is not a tax but merely a provisional payment of an amount towards tax due as it is simply a payment to words the payment of tax which is determined after regular assessment to be payable in the future. The apex Court expressly observed that the said section 53 which relates to payment of advance tax under the 1979 Ordinance (since repealed) is analogous with the provisions of section 18A ibid. In another judgment reported as (2001) 83 Tax 1919 (SC Pak.) has held as under:

"There is nothing in section 53 of the Ordinance, 1979 where under the Assessing Officer/Deputy Commissioner of Income Tax has any authority to frame assessment under section 53 of the said Ordinance and to insist upon demand of advance tax in case advance income tax is not paid by assessee of time, (page 122A).

Admittedly, the impugned order of demand was without jurisdiction and unlawful, consequently there would be no bar to the filing of constitutional petition under Art.199 of the Constitution of Islamic Republic of Pakistan considering also that section 53 of said Ordinance is not mentioned in section 129 of the said Ordinance as appeal would lie only against the order passed under provision of law mentioned in section 129 of Ordinance, 1979 (page 123B).

The petition under Article 199 of the Constitution was maintainable and the learned members of the Division Bench of Sindh High Court rightly held so."

12. We have heard the learned counsel for both the parties and have also gone through the case-law cited at the Bar. In the light of arguments tendered as well as the case-law in support thereof we are of the considered view that the learned Assessing Officer as well as the learned First Appellate Authority erred in law while levying tax under section 14C of the repealed Act. We would like to observe that the judgments cited by the learned A.R. of the assessee are on all fours to the case of the assessee. Since it has been categorically observed by the apex Court that the Assessing Officer/Deputy Commissioner of Income Tax has no authority to frame assessment and to insist upon demand of advance income tax in case where the same is not paid by the assessee. It will be pertinen to mention here that provisions of section 14C of the repealed Wealth Tax Act as well as section 53 of the Income Tax Ordinance, 1979 are part materia and postulate the similar situation i.e. payment of advance tax. Hence, the order passed under section 14C for all the years under consideration are cancelled. The appeal filed by the assessee are accordingly allowed.

C.M.A./532/Tax(Trib.)???????????????????????????????????????????????????????????? Appeal allowed.