VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 475 (2007)

Wealth Tax Act (XV of 1963)---

----Ss.17-B, 25 & 16(3)---Wealth Tax Rules, 1963, R.8(2)(c)(ii)---Powers of Inspecting Assistant Commissioner to revise Wealth Tax Officer's order---Service of notice and merger---Assessee contended that impugned order did not mention the factum of service either on the assessee or his representative which clearly showed that no notice whatsoever was served upon the assessee; that in absence of proper service of notice the Assessing Authority could not be vested with jurisdiction to decide the case; that Original order passed by the Deputy Commissioner of Income Tax had merged in the subsequent order passed under S.25 of the Wealth Tax Act, 1963 by the Commissioner of Wealth Tax in his revisional jurisdiction that original order was also rectified by the Assessing Officer and that original order having merged with the subsequent revisional order as well as with the rectified order, original order passed under S.16(3) of the Wealth Tax Act, 1963 would not hold the field and S.17-B of the Wealth Tax Act, 1963 could not be invoked in the case of assessee---Validity---Held, admittedly there was no order holding the field since the original order stood merged in a subsequent rectified as well as in the revisional order passed under S.25 of the Wealth Tax Act, 1963 and that no notice was served upon the assessee which was a sine qua non for initiating any proceedings under the law---Order passed by the Inspecting Assistant Commissioner under S.17-B of the Wealth Tax Act, 1963 was vacated by the Appellate Tribunal and the original order restored.

2006 PTD 37; 2000 PCTLR 28;1988 PTD (Trib.) 117 and PLD 1992 SC 549 = 1992 PTD 932 rel.

2000 PTD (Trib.) 3773 and 1990 PTD (Trib.) 914 ref.

Siraj Khalid for Appellant.

Ghazanfar Hussain, D.R.

ORDER

The captioned appeal on behalf of the assessee/appellant relating to the assessment year 2000-01 has been directed against the impugned order, dated 19-7-2004 passed by the learned I.A.C. Following grounds have been raised by the appellant:--

(i) That the order dated 19-7-2004 passed by the Inspecting Additional Commissioner, under section 17-B of the Wealth Tax Act, 1963, is bad in law and against the facts of the case.

(ii) That the order of the learned I.A.C. dated 19-7-2004 is without lawful authority as the same has been passed under an Act which has ceased to exist and, therefore, the proceedings are unlawful.

(iii) That the impugned order is ab initio void as the same passed without an opportunity of being heard.

(iv) That the proceedings initiated and concluded under section 17-B are beyond the powers of the learned I.A.C. as the order of the DCWT is not in the field.

(v) That in the absence of any material of documentary evidence and basis, it was wrong on the part or the I.A.C. to cancel the assessment being in his opinion erroneous insofar as it was prejudicial to the interests of Revenue.

(vi) That the order passed under section 17 B is tantamount to difference of opinion and against the comment of the W.T.O. in original order dated 18-3-2001 under section 16(3) under the head "movable assets" that are accepted as declared subject to action under section 17/35". Therefore is no mention of section of 17B.

Briefly stated the facts of the case are that the wealth tax assessment for the assessment year 2000-01 was made under sec tion 16(3) of the repealed Wealth Tax Act, 1963 (hereinafter called the repealed Act) at Rs.11129809. Subsequently, the said wealth tax assessment framed by the wealth tax officer was revised under section 25 of the repealed Act by the Commissioner of Wealth Tax Zone-B Lahore in view of the rectification application filed by the assessee contending that evaluation of property should have been made in respect of rent of property at Rs.19,000 per month. Whereas rent of furniture and fixture at Rs.8,500 may be excluded from valuation. Appeal effect in this regard was given vide an order dated 29-7-2003. However, the original assessment framed under section 16(3) of the repealed Act was rectified by the Assessing Authority for the reason that wealth tax has wrongly been calculated for the assessment year under appeal. As per narration made by the Assessing Officer in the rectified order passed under section 35 of the repealed Act, there was a mistake apparent on the face of the record which was rectified accordingly. Still dissatisfied with the number of proceedings taken up against the assessee, the case of the assessee was reopened under section 17-B of the repealed Act by learned I.A.C. considering assessment framed to be erroneous as well as prejudicial to the interest of Revenue due to the following reasons:--

"Shares declared in private limited companies have erroneously been evaluated at the declared value in violation of Rule 8(2) (c)(ii) of Wealth Tax Rule 1963."

3. The aforesaid assessment was cancelled by the learned I.A.C. with the direction to the wealth tax officer to reframe the assessment for proper revaluation of the share on the basis of break up value. The assessee is in further appeal before the Tribunal assailing the same.

4. Both the parties have been heard and relevant orders perused. The learned A.R has vehemently argued the case and contended that no notice with regard to the reopening of the case under section 17-B of the repealed Act was served upon the appellant, hence the assessee was condemned unheard. It was contended by the learned A.R. that perusal of the impugned order does not mention the factum of service either on the assessee or his representative, which clearly shows that no notice whatsoever was served upon the assessee. It was further stated that in the absence of proper service of notice the Assening Authority could not be vested with jurisdiction to decide the case. In support of his contention the learned A.R. relied upon various judgments reported as 2006 PTD 37, 2000 PCTLR 28,1988 PTD (Trib.) 117. The learned A.R. further submitted that original order passed by the D.C.I.T. stood merged in the subsequent order passed under section 25 of the repealed Act by the Commissioner of Wealth Tax in his revisional jurisdiction. It was also contended that original order was also rectified by the Assessing Officer. Further elaborated that original order having been merged with the subsequent revisional order as well as the rectified order, original order passed under section 16 (3) was not holding the field, hence section 17-B could not be invoked in the case of the assessee. In this regard reference was made to reported judgment cited as PLD 1992 SC 549 = 1992 PTD 932. He averred at the Bar that assumption of jurisdiction by the learned I.A.C. was illegal in the eye of law.

5. Lastly, the learned A.R argued that there was no information available on record regarding valuation of share, hence the learned I.A.C.'s stance that examination of the record revealed that order passed was erroneous as well as prejudicial to the interest of Revenue for the reason that shares declared in the private companies were erroneously evaluated. He emphasized that revisional jurisdiction by the I.A.C. could only be exercised when examination of the record showed that the assessment framed is erroneous as well as prejudicial to the interest of Revenue. In this regard Reference was made to reported judgments cited as 2000 PTD (Trib) 3773 and 1990 PTD (Trib.) 914.

6. After hearing the contentions urged by the respective parties, we feel ourselves persuaded by the arguments addressed by the learned A.R. There is no denying the fact that there was no order holding the field since the original order stood merged in the subsequent rectified as well as the revisional order passed under section 25 of the repealed Act. It is also admitted fact that no notice was served upon the assessee which is a sine qua non for initiating any proceedings under the law. In this view of the matter we vacate the impugned order passed by the learned I.A.C. under section 17-B of the repealed Act. Resultantly, the original order stands restored.

Appeal of the assessee succeeds.

C. M. A/2/Tax(Trib.)Appeal accepted.