COMMISSIONER INCOME TAX VS Mst. KUNDAN BIBI, 2007 PTD-LAHORE-HIGH-COURT-LAHORE 1667 (2007)

Wealth Tax Act (XV of 1963)---

----Ss.16(4) & 27---Notices under S.16(4) Wealth Tax Act, 1963 were issued to assessee, a dead person instead of her legal heirs---Validity---Held, notices under S.16(4), Wealth Tax Act, 1963 which required a person to file return, was a basic notice on which the whole structure of assessment was based, therefore strict compliance of S.16(4) was imperative and said section was to be strictly construed---Notices having not been issued in the names of legal 'heirs of the deceased assessee, assessment, standing in their names were of no legal effect---Legal heirs were entitled to be issued notices of assessment in their names so as to enable them to file proper representation---Department may initiate fresh proceedings against legal heirs of deceased assessee, if permissible under the law, after sending proper notice to them.

Ch. Saghir Ahmad for Appellant.

Sh. Zafar ul Islam for Respondent.

ORDER

This order shall dispose of Wealth Tax Appeals Nos. 11, 12 and 13 of 2007 which have arisen out of the order, dated 2-11-2006 passed by the learned Income Tax Appellate Tribunal Lahore Bench, Lahore, whereby the appeals of the respondent were accepted and the assessment standing in the names of the legal heirs were declared to have no legal effect being not maintainable.

2. Brief facts giving rise to these appeals are that the Assessing Officer collected information from the assessment records of Khawaja Electronics and Messrs Ameer Bakhsh and Sons which revealed that an agreement had been executed between Messrs Engro Chemical Pakistan Ltd. and legal heirs of the deceased lady assessee, namely, Mst. Kundan Bibi regarding letting out two godowns to the limited concern Messrs Engro Chemical Pakistan Limited at the rate of Rs.73,001 per month during the period relevant to assessment years 1998-1999 to 2000-2001. As the total value of godowns fell within the taxable limit, therefore, statutory notices under section 16(4) of the Wealth Tax Act, 1963 along with notices under section 16(4) of the Repealed Wealth Tax Act, 1963 were issued and served upon the legal heirs of the assessee. The notices remained uncomplied with. A number of statutory notices under section 16(4) of the said Act were issued but on every occasion the same were not complied with. Last notice under section 16(4) of the said Act was issued on 22-4-2004 for compliance on 30-4-2004 which was properly served on Muhammad Javed legal heir and son of the deceased lady assessee but on the scheduled date, no body attended nor any application for adjournment was received. Therefore, ex parte assessments under section 16(5) of the said Act were completed as per the provisions of Rule 8(3) of the Wealth Tax Rules read with Circular No.7 of 1994 by adopting total wealth at >Ets.87,60,120 for each of the assessment years. Being aggrieved, the respondent filed appeals before the Commissioner of Income Tax (Appeals), Multan, who vide order, dated 19-8-2004 dismissed the appeals of the respondent, upholding the action of the Assessing Officer. The respondent being aggrieved of the order, dated 19-8-2004 passed by the Commissioner of Income Tax (Appeals), Multan, filed appeals, which were -accepted by the Income Tax Appellate Tribunal, Lahore Bench, Lahore, vide order, dated 2-11-2006. Against the said order, the appellant has filed these appeals.

3. It is contended on behalf of the appellant that though the notice under section 16(4) of the Wealth Tax Act, 1963 was issued in the name of Mst. Kundan Bibi yet the assessments were framed in the names of the legal heirs of the deceased assessee because the demand notice is not an order but it is follow up of the assessment order, therefore, the order of the Income Tax Appellate Tribunal is against facts and circumstances and contrary to the provisions of section 19 of the Wealth Tax Act, 1963.

4. We have heard learned counsel for the appellant and perused the impugned order.

5. The contention of the learned Law Officer that the learned Income Tax Appellate Tribunal has wrongly declared the assessments standing in the names of legal heirs to be of no legal effect has no force as notice under section 16(4) of the Wealth Tax Act, 1963 was issued in the name of Mst. Kundan Bibi on 23-6-2003 whereas she had expired on 25-3-2003. It may be noted that the death certificate of Mst. Kundan Bibi showing date of death as 25-3-2003 and the notice under section 16(4) stood admitted by the parties. It is established that the Assessing Officer instead of issuing notices to all the legal heirs had issued the notice in the name of deceased lady assessee, namely, Mst. Kundan Bibi. As notice under section 16(4), which requires a person to file return, is a basic notice on which the whole structure of assessment is based, therefore, its strict compliance is imperative and the said provision of law is to be strictly construed. The learned Income Tax Appellate Tribunal has rightly held that the notices had not been issued in the names of the legal heirs of the deceased assessee and declared the assessments standing in the names of the legal heirs to be of no legal effect being not maintainable. In the fact the Department issued notices against a dead person and the same cannot be held valid for the assessment made against the legal heirs. The legal heirs are entitled to be issued notices of assessment in their names so as to enable them to file proper representation.

6. In view of the above circumstances, we are of the view that the learned Income Tax Appellate Tribunal has committed no illegality or irregularity in passing the impugned order, which is hereby maintained. Therefore, these wealth tax appeals are dismissed in limine.

Before parting with the order, it may be observed that the Department may initiate fresh proceedings against legal heirs of Mst. Kundan Bibi, if permissible under the law, after sending proper notice to them.

M.B.A./C-9/LAppeals dismissed.