VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 8 (2008)

(a) Income Tax Ordinance (XXXI of 1979)---

----S.65---Additional assessment---Show-cause notice was issued to express the intention for initiating the proceedings under S.65 of the Income Tax Ordinance, 1979---Subsequent to such show-cause notice, approval from Inspecting Additional Commissioner was obtained and statutory notice under S.65 of the Income Tax Ordinance, 1979 was issued---Assessee contended that it was illegal as prior to assumption of jurisdiction, no approval existed for issuance of show-cause notice---Validity---Held, it was merely a pre-show-cause notice being the compliance of the principle of audi alteram partem because the proceedings under section 65 of the Income Tax Ordinance, 1979 were penal in nature, prior to it the Assessing Officer afforded opportunity to the assessee for explaining the correct factual and legal position---After considering the reply, the prescribed procedure was adopted i.e. seeking approval and issuance of notice under S.65 of the Income Tax Ordinance, 1979.

2005 PTD 480; 2001 PTD 1633; 1997 PTD 47 and 2006 PTD (Trib.) 804 ref.

(b) Income Tax Ordinance (XXXI of 1979)---

----S.65---Additional assessment---Ticking of two clauses---Notice under S.65 of the Income Tax Ordinance, 1979 ticking two clauses (a) and (b) was illegal and without jurisdiction---Doubled ticking/marking of clauses as per notice under S.65 of the Income Tax Ordinance, 1979 being not clear expression of a charge against the assessee as well as lacking the proper application of mind was illegal and without jurisdiction---Assessing Officer for framing the proceedings under S.65 of the Income Tax Ordinance, 1979 should have to express his view very categorically that under which specific provision of law the assessee was being subjected to the proposed action---Assessments being illegal and void ab initio were annulled by the Appellate Tribunal.

1988 PTD (Trib.) 973 ref.

Siraj-tid-Din Khalid, A.R. for Applicant.

Ahmad Shuja Khan, D.R. for Respondent.

ORDER

Relevant facts leading to the titled appeals as well as applications 'are that the original assessments in the instant case were finalized but subsequently the assessment were reopened under section 65 on receipt of a complaint and reassessment was completed by computing income at different figures. At first appellate stage, the contention of the appellant-assessee through additional grounds, inter alia, was that proper clauses of the statutory notices have not been ticked off by the Assessing Officer by referring to 1988 PTD (Trib.) 973. Through the impugned order, the learned first appellate authority observed as under:--

"Examination of record reveals that income tax returns have been filed in the name of "Pakistan General Goods Transport Co., 60-Brandreth Road". These have been signed by Mr. Ijaz -ud-Din Butt. As evident from the Income Tax returns, Mr. Ijaz -ud-Din Butt has filed return in the name of Pakistan General Goods as sole proprietor. No prejudice has been caused to the appellant by not writing his name along with name of business on the statutory notice issued under section 65. By not mentioning name of Mr. Ijaz-ud-Din Butt proprietorship of concern cannot change. In ground No.3 objection has been raised that in notice under section 65 proper clause has not been ticked. It is correct that the Assessing Officer has ticked clause (a) i.e. escaped assessment and clause-b i.e. under assessed but again no prejudice has been caused by ticking two clauses in the notice under section 65. In quite a number of cases superior appellate forums have held that order cannot be vitiated on wrong quoting of section unless it causes some prejudice to the assessee. Here too no pre-juice has been caused to the appellant. All the additional grounds of appeal being devoid of merit are rejected."

2. Through the titled appeals as well as applications, the appellant calls in question the first appellate order, dated 18-4-2001 recorded by the learned CIT(A), Zone-V, Lahore. During the course of appeal proceedings, the applications seeking for taking the additional grounds have also been filed by the appellant. It is pertinent to mention that common grounds have been taken in respect of the identical issues involved in all the years. As far as the applications for raising the additional grounds are concerned, these are simply the explanation to their earlier original one. At Serial. No 18 of the Original Grounds, particularly the ground for amending, altering or for additional grounds has been specifically taken. So keeping in view such situation as per Ground No.18, we allow for taking up the additional grounds.

3. At the very outset, the learned A.R. for the appellant, however, has, inter alia, made the submissions before us that the notice under section 65, dated 5-3-1999 simultaneously ticking two clauses (a) & (b) was illegal and without jurisdiction. The learned A.R. has also submitted that the re-assessment has been made purely on a complaint. As a result of it, firstly, the/show-cause notice, dated 6-2-1999 was issued to express the intention for initiating the proceedings under section 65 of the repealed Income Tax Ordinance, 1979. It is subsequent to this show-cause notice, dated 6-2-1999 that approval from the Inspecting Additional Commissioner was obtained and statutory notice under section 65, dated 5-3-1999 was issued. The learned A.R. argued that it is illegal as prior to assumption of jurisdiction, no approval existed for issuance of show-cause notice, dated 6-2-1999. The learned A.R. further submitted that the compliance to notices was, however, made under protest. According to learned A.R. the notices were violative of subsection (2) of section 65 since it was non-disclosure of the property income as well as residential house. In support of his submissions, the learned A.R. referred to the following citations:

2005 PTD 480; 2001 PTD 1633; 1997 PTD 47 and 2006 PTD (Trib.) 804 paras 7, 8 at Page 810 & para. 10 at Page 814.

4. We have considered the arguments canvassed by the learned A.R. appearing for the appellant and learned D.R. appearing for the Revenue. We have gone through the orders passed by the authorities below. The authorities supra cited before us have also been considered and examined in the light of the facts found on the record of this case. As far as the contention of the learned A.R. that the assumption of jurisdiction under section 65 was vide notice, dated 6-2-1999 when no approval existed, here we have not been able to get ourselves persuaded to this argument because it was merely a pre-show-cause notice being the compliance of the opportunity of audit alteram partem because the proceedings under section 65 are penal in nature, prior to it the Assessing Officer afforded opportunity to the appellant-assessee for explaining the correct factual and legal position. It is after considering the reply to it that finally the prescribed procedure was adopted i.e. seeking approval and issuance of notice under section 65. However, we found ourselves in agreement with the learned A.R. that the notice under section 65, dated 5-3-1999 ticking two clauses (a) & (b) was illegal and without jurisdiction. We, therefore, without taking into account the pros and cons of the instant case, deem it proper and fair to annul the assessments for all the years under appeal on the basis of settled ratio that double ticking/marking of the clauses as per Notice under section 65 being not clear expression of a charge against the assessee as well as lacking the proper application of mind is illegal and without jurisdiction. The Assessing Officer for framing the proceedings 'under section 65 should have to express his view very categorically that under which specific provision of law the assessee is being subjected to the proposed action. Hence', the impugned assessments being illegal and void ab initio are annulled' accordingly. In the result, all the appeals as well as applications of the appellant succeed in the manner supra.

C.M.A./97/Tax(Trib.)Appeals accepted.