VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1551 (2009)

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

----S.35---Rectification of mistake---Application seeking rectification/re call of Appellate- Tribunal's order---Assessee contended that findings given by the First Appellate Authority were not 'only well-reasoned but stood supported by the relevant case-law incorporated in the order---Mistake floating on the surface of the order was committed when the Appellate Tribunal observed that no reason had been assigned and no case-law had been cited in support thereof when the same stands mentioned in the order of First Appellate Authority---Validity---Conten tion of the assessee was correct---Case-law discussed by the First Appellate Authority was neither mentioned nor discussed by the Appellate Tribunal while dismissing appeals of the assessee---Arguments advanced by the assessee before the Appellate Tribunal were also neither attended to, nor dilated upon---Resultantly, mistakes on the face of record had been committed, which required rectification---Order was recalled by the Appellate Tribunal in circumstances.

(1972) 83 ITR 582 (S.C. of India); PLD 2002 SC 208; 1996 PTD (Trib.) 2904; (1997) 75 Tax 108 (Trib.); 2009 PTD (Trib.) 62 and 2000 PTD (Trib.) 2157 rel.

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

----S.16---Wealth Tax Rules, 1963, R.8(2)---Assessment---Shares and securities---Valuation of---Assessee contended that all assets of the company vested in the Court auctioneer and neither the assessee-could be a willing seller of shares nor there could be any willing purchaser of such shares---Assessee did not own shares on the valuation date, thus the shares had no capital value for the assessee---Assessee was assessed at nil capital value of the shares---First Appellate Authority accepted the plea of the assessee and found that valuation on basis of face value of the shares was illegal---Validity---Appellate Tribunal having already found that mistakes apparent on the face of the order passed by the Appellate Tribunal were committed, Appellate Tribunal, therefore, rectified the same---Order of Appellate Tribunal was based on erroneous assumption--Appellate Tribunal fell in error, while ignoring the ratio settled through the judgments delivered by the Supreme Courts and Tribunal---Departmental appeal was rejected by the Appellate Tribunal through the rectified order.

(1972) 83 ITR 582 (S.C. of India) and C.M.A. No.982/L/98 rel.

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

----Ss.3 & 16---Charge of wealth tax---Sales of property were denied by the Assessing Officer---Sales proceeds were deposited to pay liabilities--Assessee contended that Assessing Officer had no authority to levy wealth tax on sale proceeds on the basis of suspicion---Previous transactions could not be made basis for levy of wealth tax because burden of proof of the allegation that the assessee had sale proceeds with him on valuation date while the assessee had specifically denied the same---Validity---Addition on account of sale proceeds were deleted---Order of First Appellate Authority was in consonance with the legal pronouncements delivered by the higher legal forums and called for no interference---Appeals of the Revenue being devoid of any merit were rejected by the Appellate Tribunal.

PLD 1996 Karachi 68 rel.

Mian Ashiq Hussain and Ch. Mumtaz-ul-Hassan for Appellant.

S.A. Masood Raza Qazilbash, D.R. for Respondent.

ORDER

Titled Miscellaneous applications pertaining to the assessment years 1996-97 to 2000-2001 have been filed at the instance of the assessment/applicant seeking rectification/recall of the Tribunal's order, dated 27-5-2006, passed vide WTAs Nos.515 to 519/LB/2005.

2. Facts in brief are that assessments framed under section 16(3) of the repealed Wealth Tax Act, 1963 (hereinafter called the repealed Act) were subjected to revisional jurisdiction as provided for under section 17-B of the repealed Act. The reason for invoking the supra mentioned section was that since Messrs Okara Textile Mills Ltd. had not been wound' up, the assessee retained title in the shares of the company, therefore, same were assessable in the hands of the assessee. Thus original assessments were cancelled after having been treated the same it as erroneous as well as prejudicial to the interest of the Revenue. In the subsequent proceedings conducted under section 16(3) & (17B) bid the value of the shares of the company was assessed as per Wealth Tax Rules, with the observation that since winding up proceedings have not been completed, the title of the shares of the company vested in the assessee, hence it was assessed accordingly.

3. The appeal preferred by the assessee was accepted by the learned First Appellate authority who cancelled the assessments framed under section 17B of the repealed Ordinance. The learned CIT(A) vide its order, dated 20-4-2005 deleted the addition for all the assessment years, which were made on account of valuation of shares of the company in view of the reported judgment cited as (1972) 83 ITR 582 (S.C. of India). For the assessment year 1998-99 to 2000-2001, assessed value of the Property No.79-C-1, Gulberg-III, Lahore was also deleted in the light of judgment, cited as PLD 1996 (Karachi High Court) 68. Being aggrieved with the said treatment the Revenue preferred appeal before the Tribunal which were accepted. Through the instant miscellaneous applications the assessee has sought rectification in the Tribunals' order, dated 27-5-2006 on the basis of the reasons urged through the grounds of appeal appended with the aforementioned applications.

4. Both the parties have been heard and relevant orders perused. The learned counsel appearing on behalf of the assessee, contended that the mistakes are very much apparent on the face of the record, hence order, dated 27-5-2006, warrants rectification. It is the contention of the learned A.R. that the Tribunal while vacating the order passed by the learned First Appellate Authority, based its judgment on fallacious reasoning. In this respect the learned A.R. referred to the operative paragraph of the judgment passed by the Tribunal, which is as under:--

"The direction to delete this addition in assessment year 1998-99 to 2000-2001 is without any basis and the arguments of the learned A.R. are not supported with any relevant case-law."

He pointed out that the findings given by the learned First Appellate Authority were not only well reasoned but stood supported by the relevant case-law incorporated at page 2 of the order. He submitted that a mistake floating on the surface of the order was committed when the Tribunal observed that no reason has been assigned and no case-law has been cited in support thereof when the same stands mentioned in the order of the learned CIT(A). To substantiate his assertion, he relied upon judgment of the apex Court of Pakistan, reported as PLD 2002 SC 208. The august Supreme Court held as under:--

"Order based on erroneous assumption of material facts, or without adverting to a provision of law, or a departure from undisputed construction of law and constitution may, however, amount to error on face of record."

5. It was further argued that the issue which was sub judice before the Tribunal, was that whether, after the commencement of the liquidation proceedings, the title in the shares of the company vested in the assessee as owner of the shares and thus could be sold/transferred at the free-will of the assessee. He stated that, to support the stance of the applicant, a judgment reported as 1996 PTD (Trib.) 2904 was cited before the learned Bench of the Tribunal, but the same was not only ignored, on the contrary, the Tribunal proceeded to observe that no case-law was cited which was based on erroneous assumption. He emphasized that instant observation was a mistake apparent on the face of record. It was pleaded that such mistake was rectifiable in the light of the judgment of the full Bench of the Tribunal, cited as (1997) 75 Tax 108 (Trib.).

6. While continuing with his arguments, it was further pleaded that the learned Bench of the Tribunal, also committed mistake on the face of record, when a judgment cited by the A.R. of the assessee and reported as (1972) 83 ITR 582 (S.C. India) was not adverted to which supported the assessee's view point that capital value of an asset is the selling price between a wiling seller and a purchaser. Further submitted that case-law relied upon by the learned First Appellate Authority, on the basis of which additions were deleted were neither mentioned nor discussed by the ITAT which is a mistake apparent on the face of record. In this regard reference was made to a reported judgment of the Tribunal cited as 2006 PTD (Trib.) 62 wherein it has been held:--

"Therefore, the mistake of non-mentioning of the order sheet entries in their true perspective and not instancing the arguments and the case-law therefore, are apparent on record. Such position has resulted into incomplete adjudication of the grounds, arguments and reliance. The case-law relied upon by the A.R. in respect of scope of rectification application is squarely applicable and when the grounds, arguments and reliance are not mentioned, discussed and adjudicated upon the order is rectifiable."

Reference was also made to a reported judgment cited as 2000 PTD (Trib.) 2157 wherein it was held:--

"However, it is obvious from the record that assessee has furnished two judgments which he considered were relevant to the facts and circumstances, but the Tribunal had not discussed it not being impressed for its relevance. However, in the absence of any such observation and for the substantial justice we have no hesitation in recalling our order to this extent."

The learned D.R. on the other hand opposed the arguments advanced by the learned A.R., however, failed to rebut the assertions made by the learned A.R. at the bar.

5(sic). In view of the above discussion as well as case-law cited supra, we are of the considered opinion that the contention of the assessee in correct. Case-law discussed by the learned first appellate authority was neither mentioned nor discussed by the Tribunal while dismissing appeals of the assessee. Besides, the arguments advanced by the learned A.R. before the learned Bench of the Tribunal were also neither attended to, nor dilated upon. Resultantly, mistakes on the face of record have been committed, which require rectification. Therefore, in the interest of justice, order, dated 27-5-2006 passed vide W.T.As. Nos.515 to 519/LB/2005 is recalled and the appeals are disposed as under:--

6(sic). The Miscellaneous applications succeed.

WTAs Nos. 515 to 519/LB of 2005

7. Titled wealth tax appeals have been filed at the instance of the revenue calling in question the impugned order, dated 20-4-2005. Facts have already been narrated in the above mentioned paragraphs. The common contention of the Revenue for all the years under appeal is that the learned CIT(A) was not justified to hold the market value of share at Nil and assessment framed on the basis of the face value of shares in illegal. For the assessment years 1998-99 to 2000-2001 the Revenue has also agitated the deletion of value of Property No.79-C-1, Gulbeg-III, Lahore.

8. Before the learned First Appellate Authority, it was argued by the learned A.R. of the assessee that the property of the company including the shares vested in the Court-auctioneer (vide orders of the Hon'ble Lahore Court in C.O. No.65/1992 filed by Habib Bank Limited against Messrs Okara Textile Mills) and as per Rule 8 of the repealed Wealth Tax Act, the assessee could not sell the shares in the open market, hence, market price had to be taken into consideration, which was nil, for the reason that Court-auctioneer was appointed and assessment of the company vested with the auctioneer on behalf of the Court. In this regard reference was made to the judgment of the Hon'ble High Court in C.M. No.982/L/98 wherein it was held:--

"As the property now vests in the Court-auctioneer appointed by the Court let the Electricity connection be restored."

The learned A.R. of the assessee also referred to a judgment from Indian jurisdiction reported as (1972) 83 ITR 582 (S.C. India) whereby it was held:--

"The selling price between a willing seller and a willing purchaser of property in question subject to the restriction that it can only be occupied in its present condition."

9. The learned A.R. reiterated that in case of Okara Textile Mill Ltd. all the assets of the company vested in the Court auctioneer and neither the assessee could be a willing seller of shares nor there could be any willing purchaser of such shares. The assessee, therefore, did not own shares on the valuation date, thus the shares had no capital value for the assessee. The assessee was, therefore, assessed at nil capital value of the shares. The learned CIT(A) accepted the plea of the assessee in the light of judgments of the superior Courts and held that valuation on basis of face value of the shares is illegal. The learned D.R. opposed the arguments advanced by the learned A.R., however, failed to rebut the assertions made by the learned A.R. of the assessee.

10. After hearing both the parties and going through the relevant orders as well as case-law cited by the learned A.R., we are not inclined to interfere in the impugned order on this issue. Since we have already held that mistakes apparent on the face of the order passed by the Tribunal were committed, we tend to rectify the same. We do hereby observe that the Tribunal's order, dated 27-5-2006 was based on erroneous assumption. Besides, the learned bench of the Tribunal also fell in error, while ignoring the ratio settled through the judgments delivered by the Supreme Court of Pakistan, Supreme Court India, High Courts and the Tribunal. In such-like circumstances, through the instant recited order, we are constrained to observe that the departmental appeal merited rejection. Consequently, the order passed by the learned CIT(A) is hereby maintained on the issue of valuation.

11. As far as deletion of additions on account of sale proceeds of House No.79-C-1, Gulberg-III, is concerned, it was argued by the learned A.R. that the sale of the property was denied by the Assessing Officer. It was submitted that the assessee deposited Rs.50,00,000 in Habib Bank Limited to pay liabilities of Okara Textile Mills (copies of deposit slips were produced). It was argued that the Assessing Officer had no authority to levy wealth tax on sale proceeds on the basis of suspicion. Further argued that the previous transactions cannot be made basis for levy of wealth tax because burden of proof of the allegation that the appellant had sale proceeds with him on valuation date while the assessee has specifically denied the same. In this regard reference was made to the reported judgment cited as PLD 1996 (Karachi High Court) 68 wherein their lordships held that "he who alleges should prove". Keeping all these facts in view, additions on account sale proceeds of House No.79-C-1, Gulberg-III, Lahore were deleted. The order of the learned CIT(A) is in consonance with the legal pronouncements delivered by the higher legal fora, calls for no interference.

12. As a result of above discussion, appeals of the Revenue being devoid of any merit stand rejected.

C.M.A./76/Tax(Trib.)Revenue appeal rejected.