I.T.A No. 4294/LB of 2005, decided on 24th November, 2006. VS I.T.A No. 4294/LB of 2005, decided on 24th November, 2006., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1034 (2006)

Income Tax Ordinance (XXXI of 1979)---

----Ss.129, 62, 61, 59(A) & 156(3)---Appeal to the Appellate Additional Commissioner---Setting aside of assessment by the First Appellate Authority for reappraisal and re-adjudication of the case after observing that---"Taxation Officer was not justified to complete the assessment on 30-6-2001 under S.62 of the Income Tax Ordinance, 1979 without issuing statutory notices under Ss. 61/62 of the Income Tax Ordinance, 1979"---Validity---Condition of notices to the assessee was of mandatory nature for assessment purposes---Order without a notice would be wholly void ab initio as being an act performed in disregard of the provisions of the statute and any further action taken on the basis of such void order would also be vitiated and the defects at the initial stage would be incurable by a hearing at a subsequent stage---No justification was found in the order of First Appellate Authority remanding the matter to the Taxation Officer---Order of First Appellate Authority was vacated and the assessment order passed by the Taxation Officer was cancelled by the Appellate Tribunal.

1971 SCMR 681 rel.

P.T.R. No. 2 of 2001; 2003 PTD (Trib.) 1956; (2002) 88 Tax 48 (Trib.); 2002 PTD 407; 2002 PTD 629; I.T.As. Nos.1832 & 1833/LB of 1985-86 and Messrs Hazara Engineering Company v. I.T.O. (1979) 39 Tax 30 (Trib.) ref.

M. Iqbal Chughtai for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

ORDER

Through this appeal, the appellant has objected to the impugned order of the learned CIT(A) dated 10-5-2005 for the assessment year 1998-99 on the following grounds:---

(2) Having conceded that the assessment could not be framed under section 62 of the repealed Income Tax Ordinance, 1979 without issue of notices under sections 61/62 of the Ordinance, the learned CIT(A) was not justified to set aside the impugned assessment order to be re-framed. In the circumstances, the return of income filed by the appellant merited acceptance under section 59A of the Ordinance.

(3) Without prejudice to Ground 2 above, the learned CIT (A) erred in failing to give his finding on the following grounds of appeal agitated before him on merit:

Ground No.3-claim for loss from house property.

Ground No.4- credit claimed for tax paid in the USA, on salary income earned there.

Ground No.5- erroneous charge of additional tax under section 88 of the Ordinance.

(4) The learned CIT (A) also erred in failing to give his finding on the ground of appeal No.6 being an additional ground of appeal seeking confirmation of the relief allowed through operation of section 156 (3) of the Ordinance.

Mr. M. Iqbal Chughtai, Advocate has appeared on behalf of the appellant and has contended that the appellant, in this case, is an individual, deriving income primarily from salary and other sources such as dividend and property. Salary income was partly from Pakistan and partly from U.S.A. He has submitted that assessment for the year under review has been framed vide order dated 30-6-2001 under section 62 without issuing notice under section 61 or under section 62 of the repealed Income Tax Ordinance, 1979. He has submitted that assessment, without notice, is not sustainable under the law and the return of income filed by the assessee merited acceptance under section 59(A) of the repealed Income Tax Ordinance, 1979. He has submitted that an application was submitted to the Taxation Officer on 31-8-2001 for rectification of mistake in the assessment with the documents on all the issues, but the Taxation Officer has not issued his order on the aforesaid rectification application and consequently, mistakes applied for rectification stand rectified as provided under subsection (3) of section 156 of the repealed Income Tax Ordinance, 1979 and as a result thereof, assessment for the year is to be on the basis of income as declared by the assessee. He has contended that the learned CIT(A) after observing that the Taxation Officer was not justified to complete the assessment on 30-6-2001 under section 62 without issuing statutory notices under sections 61/62, has set aside the impugned assessment order and has remanded back it to the Taxation Officer for reappraisal and re-adjudication of the case, which is not permitted under the law. He has, in this respect, placed before us the decision of Hon'ble Supreme Court of Pakistan reported 1971 SCMR 681, decision of Hon'ble Lahore High Court dated 22-11-2001 in PTR No.2 of 2001 decisions of this Tribunal reported as 2003 PTD (Trib.) 1956 & (2002) 88 Tax 48 (Trib.) decision of Hon'ble Karachi High Court reported as 2002 PTD 407 (H.C. Kar), the decision of Hon'ble Lahore High Court reported as 2002 PTD 629, the order of this Tribunal dated 1-4-1990 in I.T.As. Nos.1832 and 1833/LB of 1985-86 (Assessment years 1979-80 and 1980-81) in the case of Messrs Hazara Engineering Company v. ITO and the order of this Tribunal reported as (1979) 39 Tax 30 (Trib.).

On the other hand, learned DR is supporting the impugned orders of the Officers below. She has contended that as the learned CIT(A) has set aside the assessment, the assessee may explain his position before the Taxation Officer.

We have heard the learned representatives from both the sides and have also perused the impugned order of the learned CIT (A) and the assessment order.

While perusal of assessment order, we have found that the Taxation Officer without issuing notices to the assessee and giving him opportunity of being heard has made the assessment and this fact has also been admitted by the learned CIT (A) in the impugned order, but he has set aside the assessment. On behalf of the appellant a long list of decisions of this Tribunal as well as Hon'ble High Courts and Supreme Court of Pakistan has been placed before us wherein it has been specifically held that "Failure to give statutory notices provided under the law renders the impugned assessment void ab initio and the defects made at the Initial stage would remain incurable even if opportunities of hearing is afforded at the subsequent stage". This issue has been thrashed out up to the stage of Hon'ble Supreme Court of Pakistan and the Hon'ble Supreme Court of Pakistan has taken the view that "where the giving of a notice is provided for by the statute itself, then the failure to give such a notice is fatal and cannot be cured". We have noted that for assessment purposes, the condition of notices to the assessee is of the mandatory, nature, therefore, the order without a notice would be wholly void, ab initio as being an act performed in disregard of the provisions of the statute and any further action taken on the basis of such void order would also be vitiated and the defects at the Initial stage would be incurable by a hearing at a subsequent stage.

In view of these clear findings of the Hon'ble Superior Courts, we find no justification in the impugned order of the learned CIT (A) remanding back the matter to the Taxation Officer. The impugned order of the learned CIT(A) is, therefore, vacated and the assessment order passed by the Taxation Officer is cancelled. The declared version filed by the assessee is directed to be allowed.

The appeal filed by the assessee is allowed.

C.M.A./233/Tax(Trib).Appeal accepted.