I.T.As. Nos. 3691/LB and 3995/LB of 2003, decided on 20th December, 2005. VS I.T.As. Nos. 3691/LB and 3995/LB of 2003, decided on 20th December, 2005., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2010 (2005)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 66A, 59(4) & 62---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Self-assessment---Assessee contended that no short document notice was issued before 30-6-1994 for making good the deficiency of wealth statement and assessment stood completed under S.59(4) of the Income Tax Ordinance, 1979, that when assessment already stood completed by operation of law there was no justification to frame a normal law assessment under S.62 of the Income Tax Ordinance, 1979; and that original deemed assessment order under S. 59(4) of the Income Tax Ordinance, 1979 was holding the field but order under S.62 of the Income Tax Ordinance, 1979 had been subjected to S.66A of the Income Tax Ordinance, 1979---Validity---Assessment under S.62 of the Income Tax Ordinance, 1979 was without any jurisdiction and void ab initio and nullity in the eye of law and any superstructure built on illegal premises was unlawful and without jurisdiction---Assessment under S.62 of the Income Tax Ordinance, 1979 was cancelled and deemed assessment under S.59(4) of the Income Tax Ordinance, 1979 was restored by the Appellate Tribunal---Departmental appeal being without any merit was rejected.

1993 PTD 332 and I.T.A. No.1321/LB of 2002 ref.

Mian Ashiq Hussain for Appellant (in I.T.A. 3691/LB of 2003).

Muzammal Hussain, DR for Respondent (in I.T.A. 3691/LB of 2003).

Muzammal Hussain, DR for Appellant (in I.T.A. 3995/LB of 2003).

Mian Ashiq Hussain for Respondent (in I.T.A. 3995/LB of 2003).

ORDER

The titled cross-appeals have been filed against order, dated 9-6-2003 recorded by the learned CIT(A) Zone 1, Lahore relating to the assessment year 1993-94. The assessee has agitated that the learned CIT(A) has failed to appreciate the fact that entire proceedings based on an order passed under section 62 were illegal being without jurisdiction and the asscssee's return duly qualified for acceptance under SAS. It was further agitated that there can .only be one assessment order in the field, hence the order passed under section 62 was not maintainable. The Department on the other hand, has agitated the reduction in valuation of laud and cost of construction by the learned First Appellate Authority.

2. The learned AR for the assessee-appellant stated that admittedly the return was filed under self-assessment scheme and it was deemed to be assessed under section 59(4) as no intimation was provided by the Department for taking out the case outside the scope of the self-assessment scheme. The learned AR further pointed out that the assessment was finalized on 24-4-1996 under section 62 inn which it was stated that the case is being processed under normal law for the reason that no wealth statement was filed along with the return. The learned AR further argued that what the Department should have been done was that a short document notice IT-105 should have been issued For making good the deficiency which has not been done by the Assessing Officer/Department. The learned AR stated that when the action 'under section 66A was invoked by the IAC of Income Tax Range III, Companies Zone-1, Lahore there were two orders holding the field one that of deemed assessment under section 59(4) and the other one framed under section 62 by the ACIT Circle 08 Companies Zone 1, Lahore, dated 24-4-1996 passed through demand and collection Register No.247. Now the learned AR stated that the subsequent order i.e. under section 62 was illegal and unjustified in view of the fact that assessment stood completed as per deeming provisions of section 59(4) of the repealed Income Tax Ordinance, 1979. The learned AR further continuing his arguments stated that limitation started from 30-6-1994 and in this behalf he placed his reliance on a case cited as 1993 PTD 332. In this manner the learned AR stated that the Department was not justified in invoking the provisions of section 66A on an order which was illegal as the assessment already stood completed automatically under section 59(4) on 30-6-1994. The learned AR, however, further informed this Tribunal that against the order under section. 66A an appeal was moved before the ITAT which was rejected vide I.T.A. No. 666/LB of 2000, dated 20-12-2000. While summing up his arguments the learned AR stated that when the edifice that was built on a wrong premises through an illegal action cannot sustain. And, therefore, .the action of the Department did not attain finality as the original action of the Department of invoking section 66A against the order under section 62 was totally illegal. In this behalf the learned AR quoted an unreported decision of this Tribunal, dated 22-8-2002 passed in I.T.A. No.1321/LB of 2002 (assessment year 1996-97). The learned DR, on the other hand, agitated against the relief allowed as per grounds of appeal.

3. We have heard both the sides and perused the orders of the Authorities below. So far as the assssses's appeal is concerned there is considerable force and weight in the arguments of the learned AR as no short document notice was issued to the assesses before 30-6-1994 for making good the deficiency of wealth statement. We, therefore, observe that the assessment stood completed under section 59(4) of the Income Tax Ordinance, 1179. When the assessment already stood completed by operation of law there was no justification with the Department to frame a normal law assessment under section 62 by ACIT Circle-08 Companies Zone-1, Lahore on 24-4-1996. We, therefore, hold that the original deemed assessment order under section 59(4) was holding the field but order under section 62 has been subjected to section 66A of the Income Tax Ordinance, 1979 whereas the assessment under section 62 was without any jurisdiction and void ab initio and nullity in the eye of law. So, therefore, we agree with the learned AR for the assesses-appellant that any superstructure in this case built on illegal premises is unlawful and without jurisdiction. In view of this situation we are of the considered opinion that assessment under section 62 framed by the Department merits to be cancelled and it is so directed. Hence the deemed assessment udder section 59(4) is restored.

4. Since we have accepted the appeal of the assessee, therefore, in view of the fact that the whole assessment has been cancelled and the deemed assessment being restored the departmental appeal being without any merit fails.

C.M.A./64/Tax (Trib.)Order accordingly.