Messrs KASBATI BUILDERS through Partner VS INCOME TAX APPELLATE TRIBUNAL, 2006 PTD-KARACHI-HIGH-COURT-SINDH 1088 (2005)

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

----S. 35---Income Tax Ordinance (XXXI of 1979), S.156(1)---Rectification of mistake, application for---Omission an the part of legislature to provide to department under Wealth Tax Act, 1963 'right to file rectification application was deliberate---Principles.

Sumbleen Anwar and others v. Deputy Commissioner of Income Tax 2003 PTD 1276 rel.

(b) Jurisdiction---

----Court/Tribunal/Authority, if lacking jurisdiction at all to do an act, then no amount of consent or acquiescence in the proceedings could invest same with jurisdiction---Court/Tribunal/Authority, if having jurisdiction to pass an order, then mere procedural lapse or irregularity would not vitiate its order---Principles.

Where a Court suffers from want of jurisdiction, then no amount of consent or acquiescence in the proceedings can invest such Court with the jurisdiction.

If a Court/Tribunal/Forum has no jurisdiction at all to do an act, a consent given by any party shall not confer such jurisdiction for the reason that a Court/Tribunal/Authority acquires jurisdiction from the statute law and not by consent of party. The principle that is merely a procedural lapse or irregularity, it shall not vitiate the order passed by it.

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

----S.35---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Rectification of mistake by Tribunal with consent of assessee on application of department---Validity---Section 35 of Wealth Tax Act, 1963 was a composite provision containing substantive and procedural law---Substantive law conferred jurisdiction on Tribunal to rectify mistake apparent on record, whereas procedural law provided for rectification either suo motu or upon application by assessee, whereas department has been excluded from exercising such right---Tribunal had not committed illegality in rectifying mistake in its own discretion and in exercise of suo motu jurisdiction by taking application of department as information without doing any violence to substantive provision of law conferring jurisdiction for rectification---Impugned rectification would be a case of illegal exercise of jurisdiction by Tribunal, which was always curable and subject to waiver---After objecting to jurisdiction of Tribunal to entertain application of department, assessee by recording his consent had given up his right to object to such irregularity touching upon its jurisdiction---Consent of assessee amounted to curing irregular exercise of power by Tribunal-Principles-High Court dismissed constitutional petition in circumstances.

Messrs Harjina and Co. (Pak.) Ltd., v. Commissioner Sales Tax Central 1971 SCMR 128; Collector of Customs (Appraisement) v. Abdul Majeed Khan and others 1977 SCMR 371; Mehran Associates Limited v. Commissioner of Income Tax Karachi 1993 SCMR 274 = 1993 PTD 69; Moulvi Azizur Rehman v. Ahmad Khan and others 2004 SCMR 1622; Muhammad Hussain and others v. Muhammad Shafi and others 2004 SCMR 1947) and P. Dasa Muni Reddy v. P. Appa Rao AIR 1974 SC 2089 ref.

Imtiaz Ali v. Ghulam Ali PLD 1963 SC 382 rel.

Rehan Hassan Naqvi and Miss Lubin Pervez for Petitioners.

Aqeel Ahmed Abbasi for Respondents.

Date of hearing: 13th December, 2005.

JUDGMENT

SAJJAD ALI SHAH, J.---Through this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, the petitioner has prayed as follows:--

(a) Declare that the order passed by the learned Income Tax Appellate Tribunal in M. A. (Rect.) No.458/KB of 2004 (Assessment year 1996-97), dated 11-3-2005 Tribunal is void ab initio and without jurisdiction.

(b) Declare that the invocation of section 35 of the repealed Wealth Tax Act, 1963 by the Department for rectifying the orders in W.T.A. No. 3/KB of 2004 (Assessment year 1996-97), dated 27-9-2004 is void in law, without jurisdiction and of no legal effect.

(c) Declare that the order passed by the learned Income Tax Appellate Tribunal is contrary to the provisions of section 35 of the repealed Wealth Tax Act, 1963 and is not sustainable in law.

(d) Declare that the provisions of section 35 of repealed Wealth Tax Act, 1963 could not be invoked by the Respondents for rectification of the order passed by the learned Income Tax Appellate Tribunal vide their earlier order, dated 27-9-2004, in W.T.A. No. 3/KB of 2004 (Assessment year 1996-97).

(e) Restraint the learned Income Tax Appellate Tribunal from rehearing the appeal filed by the Respondent-Department vide W.T.A. No. 3/KB/2004 (Assessment year 1996-97).

(f) Restore the order passed by learned Income Tax Appellate Tribunal in W.T.A. No. 3/KB, of 2004 (Assessment year 1996-97), dated 27-9-2004.

(g) Grant cost of petition.

The facts giving rise to the present petition are that the petitioner is a registered partnership firm having six partners and is engaged in the business as' builders and developers. They filed their returns for assessment year 1996-97 separately as Members of Association of Persons (AOP) and consequently were assessed separately under section 16(3) of the repealed Wealth Tax Act, 1963. It is the case of the petitioner that after the promulgation of the Income Tax Ordinance, 2001, the jurisdiction of the case was transferred to the Taxation Officer Circle VIII, but the Respondent No.3 (Taxation Officer Circle 5) illegally assumed the jurisdiction over the case of the petitioners for the assessment year 1996-97 and started proceedings under section 17 of the repealed Wealth Tax Act, 1963 after a lapse of about six years and finalized the ex parte assessment under section 17 / 16 (5) of the repealed Wealth Tax Act, 1963. The petitioners filed an appeal before the learned Commissioner of Income Tax / Wealth Tax (Appeals) against the ex parte assessment order, who was pleased to allow the same considering it to be passed in violation of law. Now it was the turn of the Respondent No.3 to file an appeal before the Income Tax Appellate Tribunal against the orders of Commissioner of Income Tax / Wealth Tax (Appeals). The Income Tax Tribunal also dismissed the appeal vide its order, dated 27-9-2004, holding that the Taxation Officer transgressed his jurisdiction.

Thereafter the Respondent No.3 filed rectification application before the income Tax Appellate Tribunal seeking rectification in its order, dated 27th September, 2004. It is further the case of the petitioner that despite there being no provision under section 35 of the repealed Wealth Tax Act, 1963, whereby the department could bring any mistake to the notice of Tribunal by filing rectification application, the learned Income Tax Appellate Tribunal on the basis of consent given by the petitioner allowed the rectification application filed by the department. The petitioner further pleaded that despite consent the order passed by the ITAT on rectification application is without jurisdiction.

At the very out set Mr. Rehan Hassan Naqvi submitted that he would confine his argument to the extent of jurisdiction of the Tribunal to rectify its mistake on the application of the department and would not raise any other point. Mr. Naqvi has invited our attention to section 35 of the Wealth Tax Act, 1963 and has contended that the Income Tax Appellate Tribunal can only rectify its mistake apparent from the record by two modes (a) on its own motion (b) on the motion of an Assessee and since there is no room for the department to file' a rectification application as such the Tribunal has travelled beyond its jurisdiction by rectifying its mistake on the application filed by the department.

Mr. Naqvi has further argued that the provisions of a fiscal statute are to be construed liberally in favour of tax payer and in case of any substantial doubt, the same is to be resolved in favour of the assessee and further that the tax statute is to be interpreted in the light of what is clearly expressed and the Court cannot import what is not expressed to support assumed deficiency. Since the plain language of section 35 does not permit any assumption of jurisdiction on the application of the department, therefore, the Tribunal transgressed its jurisdiction by taking cognizance on the application of the department. In support of his contention he has relied on the following cases:

Messrs Harjina and Co. (Pak.) Ltd. v. Commissioner Sales Tax Central, 1971 SCMR 128, Collector of Customs (Appraisement) v. Abdul Majeed Khan and others, 1977 SCMR 371 and Mehran Associates Limited v. Commissioner of Income Tax Karachi 1993 SCMR 274 = 1993 PTD 69.

The second argument of Mr. Naqvi appears to be that though the Assessee has given his no objection to the rectification, but such consent would not vest the ITAT with the jurisdiction to adjudicate upon such application as the ITAT was lacking jurisdiction and in support of his contention has relied on the cases of (1) Moulvi Azizur Rehman v. Ahmad Khan and others (2004 SCMR 1622), (2) Muhammad Hussain and others v. Muhammad Shafi and others (2004 SCMR 1947) and (3) P. Dasa Muni Reddy v. P. Appa Rao, (AIR 1974 SC 2089).

On the other hand Mr. Aqeeel Ahmed Abbasi, learned counsel for the Respondents has contended that the provision of section 35 of the Wealth. Tax Act, 1963 in as far as they provide a right to apply for rectification of mistake only to the Assessee are not based on reasonable classification and the suo motu power of the Income Tax Appellate Tribunal to rectify its mistake are to be read as inclusive of power to take action upon the department's application for rectification. He has further submitted that the ITAT had only recalled its earlier order, dated 27-9-2004, for fresh adjudication with the consent of petitioner and the petitioner having consented to the impugned order cannot be permitted to challenge the same by way of present petition.

In order to appreciate the first contention of Mr. Naqvi it would be appropriate to reproduce section 35 of the Wealth Tax Act, 1963 which deals with the rectification of the mistake:--

"35. Rectification of mistakes.---At any time within four years from the date of any order passed by him, or it, the Commissioner, the Wealth Tax Officer, the Appellate, Additional Commissioner and the Appellate Tribunal may, on his, or its own motion rectify any mistake apparent, from the record and shall, within a like period, rectify any such mistake which has been brought to the notice of the Commissioner, the Wealth Tax Officer, the Appellate, Additional Commissioner or the Appellate Tribunal, as the case' may be, by an assessee:

Provided that no such rectification shall be made which has the effect of enhancing the assessment unless the assessee has been given a reasonable opportunity of being heard in the matter."

A perusal of the aforesaid provision would clearly reflect that any mistake apparent from the record can be rectified within a period of four years by the Commissioner, Wealth Tax Officer, the Appellate Additional Commissioner and the Appellate Tribunal at their own motion or upon an application filed by the Assessee. However, it is significant to note that the department has not been provided with the similar right to file a rectification application. The omission appears to be deliberate on the part of the legislature for the simple reason that the provision of subsection (1) of section 156 of the Income Tax Ordinance, 1979 which are analogous to the provision of section 35 of the Wealth Tax Act, 1963 have specifically provided equal rights to the assessee as well as income tax authority to move an application for rectification. The provision of subsection (1) of section 156 of the Income Tax Ordinance, 1979 are reproduced for the sake of convenience.

"156. Rectification of mistakes.---(1) Any income tax authority or the Appellate Tribunal may amend any order passed by it to rectify any mistake apparent from the record on its own motion or on such mistake being brought to its notice by any other income tax authority or by the assessee.

(2) No order under subsection (1), which has the effect of enhancing an assessment reducing a ,refund or otherwise increasing the liability of the assessee, shall be made unless the parties affected thereby have been given a reasonable opportunity of being heard."

The perusal of the aforesaid two provision of taxing statute makes it very clear that the omission on the part of legislature to provide right to the department to file rectification application is deliberate and the Income Tax Department has no right to move an application for rectification of any mistake under section 35 of the Wealth Tax Act, 1963.

This point was earlier considered and decided by this Court in the case of Miss Sumbleen Anwar and others v. Deputy Commissioner of Income Tax (2003 PTD 1276) wherein this Court while dealing with this issue has held that the power of rectification conferred upon the designated authority is subject to certain limitations. Such limitations are of in point of time i.e., within four years from the date of order passed. Secondly, the authority who has passed the order can suo motu rectify or such mistake can be rectified at the request of an assessee and the right to apply for rectification by any Income Tax Authority has been excluded from the provision of section 35 of the Wealth Tax Act, 1963.

Now this leaves us to examine the effect of consent given by the assessee to the rectification application filed by the Department, keeping in view the second argument of Mr. Naqvi that where a Court suffers from want of jurisdiction then no amount of consent or acquiescence in the proceedings can invest such Court with the jurisdiction and in this case since the ITAT was lacking jurisdiction as such the consent of the assessee would not invest the ITAT with jurisdiction. There is no cavil to the proposition that where a Court suffers from want of jurisdiction then c no amount of consent or acquiescence in the proceedings can invest such Court with the jurisdiction. However, the point which needs to be examined is to see whether the case in hand is one where the Court/ authority suffers from want of jurisdiction which results in vitiating the proceedings taken by the Court or Tribunal and no amount of consent or waiver can invest the Court or Tribunal with the jurisdiction or it is a case of irregular exercise or assumption of jurisdiction by the Court or Tribunal which is always curable and subject to waiver.

A careful perusal of section 35 of the Wealth Tax Act shows that the authority (in this case ITAT) does not lack the jurisdiction to rectify any mistake, however, the procedure provided for rectification of such mistake is either suo motu or upon an application filed by an assessee and the department has been impliedly precluded from exercising such rights, therefore, in cases where the ITAT rectifies its mistake upon an application filed by the Department, it would be a case of irregular exercise of jurisdiction which is always curable and subject to waiver and not a case where the Court lacks the jurisdiction. At this stage it would be appropriate to clarify that if a Court / Tribunal / Forum has no jurisdiction at all to do an act, a consent given by any party shall not confer such jurisdiction for the reason that a Court / Tribunal / Authority acquires jurisdiction from the statute law and not by consent of a party. The principle that there is no waiver against law shall also be attracted. To this extent we agree with the contention of Mr. Rehan Hasan Naqvi. However, if a Court/Tribunal/Authority has the jurisdiction to pass certain order and there is merely a procedural lapse or irregularity it shall not vitiate the order passed by the Court/Tribunal/Authority. A perusal of section 35 of the Wealth Tax Act shows that the Departmental Officers as well as the Appellate Tribunal have the jurisdiction to rectify any order passed by him/it. To this extent, the law is substantive in nature and further provision is procedural in nature which provides that the Departmental Officers or Appellate Tribunal may on his or its own motion rectify any mistake apparent from record and likewise may rectify any such mistake which has been brought to his/its notice by an assessee. The question for consideration is if a mistake apparent on record is brought to the notice of Appellate Tribunal without any specific provision in this behalf in the law, whether the Tribunal would be justified in declining to exercise the jurisdiction, duty vested in it, merely for the reason that such procedure has not been specifically provided in the Statute. Once a mistake in the order of Tribunal is brought to its notice and the Tribunal is satisfied that the mistake is apparent on record which requires rectification, whether it would be appropriate to decline the exercise of suo motu jurisdiction, thereby allowing the mistake which otherwise can be corrected to continue in the judicial/quasi-judicial. We are of the opinion that it can never be the intention of legislature. Once a mistake comes to the notice of Tribunal then notwithstanding, the fact that the mistake has been brought to the notice of Tribunal by a person who is not specifically empowered in law to do so, it would always be advisable for the Tribunal to take it as an information and rectify the mistake on its own, motion. The absence of a right on the part of Departmental Officer shall have the effect to the extent that as a matter of right the Departmental Officer would not be entitled to seek a rectification but there would be no illegality on the part of Tribunal or departmental authorities to rectify the mistake in its own discretion by taking it as information and in exercise of suo motu jurisdiction. We are of the considered opinion that the classical dictum laid down by the great jurist, his Lordship Justice Kaikous, in the case of Imtiaz Ali v. Ghulam Ali PLD 1963 SC 382, as follows, is fully attracted to the situation under consideration:

"....the proper place of procedure in any system of administration to justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy...Any system which by giving effect to the form and not the substance defeats substantive rights (and) is defective to that extent."

Respectfully following the above dictum it is held that section 35 of the Wealth Tax Act, 1963, is a composite section containing substantive and procedural law. The substantive law confers jurisdiction on the Departmental Officers and the Appellate Tribunal to rectify the mistake apparent on record an the procedural law provides that it can be done either suo motu or at the instance of an assessee. Thus, the substantive law conferring jurisdiction for rectification of mistake is not to be defeated on the ground of mere technicality, more particularly when a mistake brought to the notice of Appellate Tribunal can be taken to be information and the rectification can be done by the Tribunal on its own motion and not in pursuance of the right of a person bringing mistake to the notice of Tribunal, without doing any violence to the substantive provision of law conferring jurisdiction for rectification. Consequently the argument of Mr. Naqvi is without force and not attracted to the case in hand and the consent given by the petitioner for the grant of rectification application is fully attracted which amounts to curing the irregular exercise of power by the Tribunal.

In order to further appreciate the effect of the consent given by the assessee before the Income Tax Appellate Authority for grant of rectification application, it would be beneficial to reproduce the last two paragraphs of the impugned order:--

"On the other hand, the learned counsel for the assessee respondent took up the legal objection and argued that the application was not tenable in law as a miscellaneous application was not admissible under section 35 of Wealth Tax Act, 1963.

After hearing both the sides, we are of the opinion that while deciding the departmental appeal vide his order, dated 27-9-2004 the Tribunal had dismissed the departmental appeal mainly on the issue of jurisdiction of the WTO certain issues were not considered therein. Accordingly, for the sake of consideration of all the other issues and also the issues raised by the departmental appeal other than the issue of point of jurisdiction, we deem it necessary to recall our order in W.T.A. No.3/KB of 2004, dated 27-9-2004. Accordingly, we pass this order by consent of both the parties to recall our order in departmental appeal W.T.A. No. 3/KB of 2004 and direct that same may be re-fixed for fresh hearing."

A perusal of the above reproduced two paragraphs of the impugned order reveals that the petitioner after having objected to the jurisdiction of ITAT to entertain the application filed on behalf of the Department with full knowledge of the consequences has given up his right to object to such irregularity touching upon jurisdiction of the ITAT by recording its consent cannot at this stage be allowed to challenge the jurisdiction of the Tribunal and the effect of such consent. Even otherwise every consent involves submission and by giving the consent the assessee has not only waived his right to object to such exercise or assumption of jurisdiction but in fact has submitted before the Tribunal to set aside its earlier order and to re-fix the matter for hearing afresh and after having allowed the Tribunal to pass impugned order on its own request the petitioner cannot be allowed to revoke such consent by pleading want of jurisdiction of Tribunal.

The petition consequently is devoid of merits and is hereby dismissed.

S.A.K./K-6/KPetition dismissed.