2000 PLP (Trib (PTD)

purposes of Stamp Duty 4; on June 30, 1997. Super structure At the rate of Rs.300 per square foot. Apartments/flats As registered for the purposes of Stamp duty. Commercial properties; Plots and open lands Equal to the auction value or the value specified by the District Collector for the purposes of Stamp .Duty as on June 30, 1997, Which ever is higher. Super structure

Other assets. As per provisions under this Act. Payment of tax: This wealth tax payable on the undisclosed wealth declared by any person under the scheme made under subsection (1) shall be paid by the declarant before furnishing the return and the return shall be accompanied by proof thereof. Rule 11 (Inserted vide SRO 545(1) /97, dated 25-7-1997). Tax Amnesty Scheme, 1997; In pursuance of the provisions of section 3A of he Wealth Tax Act, 1963, tax amnesty shall be available to the extent and in accordance with the following terms and conditions:-- (a) any person who, on the thirtieth day of June, 1997, holds any assets as were chargeable to wealth tax but were not so charged in any year prior to the assessment year 997-98, whether partly or wholly, may file a declaration in the prescribed form and shall thereupon be granted amnesty from any penal action, penalty or prosecution under the wealth Tax Act, 1963, subject to the following conditions that a full and correct disclosure of all assets is made in the prescribed form, not later than the thirtieth day of September, 1997 and the declaration along with the evidence of payment of tax is delivered to the Deputy Commissioner of Wealth Tax holding jurisdiction over the tax-payer. (i) That tax calculated at the rate of seven and one half per cent of the up due of undisclosed assets is deposited prior to the filing of the prescribed declaration. (ii) and a copy of . the paid challan is duly attached along with the declaration. For purpose of this clause a demand draft or a pay order for the amount of tax payable under, his scheme, furnished along with the declaration shall be deemed to the sufficient compliance of this clause. (iii) that valuation of assets contained in the said declaration is made in accordance with the provisions of section 3A of the Act, and Wealth Tax Rules 963 Provided that the Deputy Commissioner may, where basis of valuation has not been in accordance with the said provisions, proceed to adopt the prescribed basis of valuation and no amnesty would be available to the tax-payer until the amount of ax so determined payable, if any, has been duly paid and evidence thereof furnished to the Deputy Commissioner. (iv) that the declaration shall relate to hitherto undisclosed or under disclosed assets for and up to the assessment year 1997-98 and the return of wealth in respect of other assets, not appearing in the declaration, shall be separately filed for 1.997-98 in accordance with law. (v) that the assets. disclosed in the prescribed declaration shall qualify to be reflected in all subsequent returns of wealth without payment of any additional tax or penalty for past year Provided that a declaration made under section 59D of the Income Tax Act, 1979, shall also qualify for inclusion of assets- declared therein, pari passu with the declaration made under this scheme, in respect assets created out of Income chargeable to tax under that Ordinance, while assets created out of any source not taxable under that Ordinance shall enjoy amnesty only to the extent of disclosure in the declaration under section 3A. Explanation: The term 'any source not taxable under that Ordinance' includes inheritance, gift, agricultural income and capital gains. (vi) Nothing contained in this scheme shall apply to any person in whose case assets have been discovered as a result of or in respect of which proceedings have been initiated by way of Government investigation/inquiry ............ Section 59D Tax on undisclosed income. (1) Notwithstanding anything contained in this Ordinance, the Central Board of Revenue may, make scheme of payment of tax in respect of undisclosed income. (2) Where any person declares his undisclosed income in accordance with the scheme and the rules the tax on such income shall be charged at the rate of seven and half percent. of such income (3) Where a person has paid tax on his undisclosed income in accordance with the scheme and the rules, he shall- (a) be entitled to incorporate in his books of account such undisclosed income in tangible form; and (b) not be liable to pay. any tax, charge, levy, penalty or prosecution in respect of such income under this Ordinance. (4) For the purpose of this section 'undisclosed income' shall mean any income (including any investment to be deemed as income under section 13 or any other deemed income 1 for any year or years Me\ and to any assessment year or years ending on or before the thirtieth day of June, 1997, which was chargeable to tax but was not so charged. Rule 26.A. Declaration of undisclosed income.

(1) Any person -other than a company may. on or before 30th day of September, 1997 file declaration in respect of undisclosed income as defined in subsection (4) of section 59D for any year or years relevant to any assessment year or years ending on or before thirtieth day of June 1997 which was chargeable to tax but was not so charged. (2) The tar payable on the undisclosed income declared by any 'person tinder the scheme shall be paid by the declarant before furnishing the declaration and the declaration shall be accompanied by proof thereof. (3) The declaration shall be filed with the officer designated for this purpose. Rules 26B Immunity: No tax under the Income Tax Ordinance. 1979 ordinance XXXI of 1979) including the scheme shall he payable in respect of the value of the assets declared under the scheme in respect of which wealth tax has been paid in accordance with section 3.A of the Wealth Tax Act, 1963 (Act XV of 196)

29. In view of the above corresponding and parallel provisions of Wealth Tax Act, 1963 and Income Tax Ordinance, 1979, now we have to see in the light of contention and arguments of the parties as to whether the assessee fulfilled the qualification and conditions as laid down in the law or in the relevant rules for availing the amnesty from taxing of the asset in the context of issue as already framed above.

30. The case of the assessee as per contentions as already reproduced above is that the assessee made declaration for availing amnesty both for income tax and wealth tax under section 3A of the Act and under section 59D of the Ordinance and deposited tax amounting to Rs.725,640 along with declaration in respect of his undisclosed asset/income as per said provisions of law and the proceedings initiated against the assessee for taxing the said asset/income under normal law were not in accordance with law and no positive and definite information was available with the department to initiate the proceedings in that respect and no notices were served upon the assessee as neither the assessee acknowledged any service of notice through letter dated 22-1-1996 which according to A.R. of the assessee was not bearing the signatures of the assessee and that the statutory notices served on one Mr. Muhammad Yasin, Accountant of M/s. Feroz Sons Laboratories could not be regarded as service on the assessee because the assessee was having no connection with said Mr. Muhammad Yasin and not Mr. Muhammad Yasin was authorized to accept the service nor he was agent of the assessee to be served upon and that whole of the proceedings contemplating service of notice under section 56 of the Ordinance and under section 16(2) of the Act for the assessment years 1994-95, 1991-92, 1993-94 and the service of the notice under section 61 of the Ordinance and under section 17 of the Act for the assessment years 1987-88 to 1994-95 requiring the assessee to file income tax and wealth tax returns were void ab initio because no service was effected upon the assessee and the subsequent proceedings culminating in assessment order under section 16(5) of the Act. and under section 63 of the Ordinance were illegal and having no sanction of law.

31. The learned A.R. of the assessee specifically also pleaded that no enquiry was conducted or even not any enquiry was pending against the assessee with F.I.A. and the information which has been alleged to be available with the department was not a direct information against the assessee but it was a letter of the Economic Enquiry Wing of F.I.A. to the Director, Estate Management, C.D.A. dated 5-10-1988 and the proceedings were initiated by the department in November, 1995. The learned A.R. along with the above contentions pleaded that even the order sheet entry was manipulated by the department by referring the order sheet entry in respect of wealth tax assessment for assessment years 1987-88 to 1995-96 and stated that the entry dated 24-5-1998 was inserted on the top of entry dated 14-6-1998 later on which were in close proximity with each other and which in fact was depicting the attitude and biased behaviour of the department while proceeding with the case of the assessee.

32. While perusing the notices under section 16(2) of the Act dated 20-11-1995 for the assessment years 1987-88 to 1994-95, it was obvious that the said notices were bearing-the signatures of one Mr. Muhammad Yasin, Accountant of M/s. Feroz Sons and the address on the above notices was of 78-W, Blue Area, Islamabad. The notices under section 14(2) dated '13-1-1996 for assessment year 1995-96 and notices under section 17 dated 13-1-1996 for assessment year 1994-95 and notices under section 16(2) dated 13-1-1996 for assessment years 1991-92 to 1993-94 were sent by registered post on the same address i.e. 78-W, Blue Area, Islamabad.

33. Nothing has been plausibly argued on behalf of the, department to establish that Mr. Muhammad Yasin of M/s. Feroz Sons on whom the notices were served was having any connection with the assessee as to whether he was his authorized representative or his agent or his employee.

34. At this juncture, we would like to take guidance from the provisions of Code of Civil Procedure, 1908. The provisions of Order- V of the Code were relating to the issue and service of process. In rule 12 of Order-V of the Code of Civil Procedure, 1908, it is laid down that where it is practicable service shall be made on the defendant in person unless he as an agent empowered to accept service in which case service - on agent shall be sufficient. In rule l0A of Order V, the law envisages issue of process simultaneously through its agency of process and through registered post with Acknowledgement due. In rule 13 of Order-V, the method of service on agent in case of defendant carrying on business has been given where service on a person not residing within the local limits of the jurisdiction of the Court can be effected on the manager or agent who at the time of service personally carries on such business or works for such person within such limits.

35. From the above referred provisions of the Code of Civil Procedure, 1908, one can see that how important is the factum of service of process for initiating any proceedings of law against a person. The main stress has been laid on the personal service of, the respondent who is being proceeded against and in his absence on his agent who is empowered to accept service or on his male adult member of family residing with the respondent/defendant in case the respondent/defendant cannot be found and is having no agent to accept the service as given in the provisions of rule 15 of Order V of the Code.

36. There is an explanation under rule 15 of Order V of the Code to the effect that a servant is not a member of family within the meaning of this rule. It clearly meant that for effecting, the service the summon/notice are to be delivered to the respondent in person or to his agent who is duly empowered to accept the service or to male adult member of family when the respondent cannot be found and none else can be considered to be a person authorized to accept the service on behalf of the respondent or service on any other person cannot be regarded as a valid service. Then there are provisions in rule 16 of Order V of the. Code giving guidelines to the serving officer requiring him .to obtain signatures of the person to whom the notices so delivered or tendered and to have an acknowledgement of service endorsed upon the summon/notice. It clearly meant from the above provisions that the serving officer or official must make it clear in the endorsement that on whom the notice has been served as to whether he is the respondent in person or his agent duly empowered to accept the service or male adult member of family in case the respondent could not be found. Then there are provisions of service when the respondent refuses to accept the service in rule 17 of Order V of the Code and for the substituted service in rule 20 of Order V when the respondent is keeping out of the way for the purposes of avoiding service or when summons cannot be served in ordinary way.

37. As all importance is given to the process of service because this is the basic stage from where on wards the proceedings are initiated against a person ant the notice/summon is the basic document which in fact considered to be the document to call upon the person. and to provide opportunity of being heard. to the said person against whom the proceeding are to be initiated. This concept. is based on principle of natural justice and of universal natured and has also been ordained in the statute books where it always given in one form or other so that no one should be condemn unheard. It is an established principle of legal and natural justice and known as rule of audi alterem partem which has been acknowledged to applicable to both judicial as well as non-judicial proceedings whit culminate in an order against a person respecting his rights or imposing up him certain charges, liabilities and penalties etc.

38. In a recent case relating to tax matters reported as 1999 PTD 1358 (H. C. Karachi) the above concept has been acknowledged by the Honourable Sindh High Court to the effect that rule of 'audi alterem parten is applicable to both judicial and non-judicial proceedings. In the, said reported case, reliance has been placed. upon 1994 SCMR 223.

39. In the light of above discussion, we are of the view that in the case in hand, no proper service of notice was effected upon the assessee because the statutory notices aforementioned were neither bearing signatures of the assessee namely Mr. Ikram ul Haq Piracha nor it was proved that the service was effected on the agent of the assessee authorized and empowered to accept service or on the male adult member of family of the assessee in case the assessee was not found.

41. Moreover, amnesty which has been granted by insertion section 3A of the Act and section 59D of the Ordinance through Finance Act, 1997 was clearly containing a qualifying condition that the said amnesty would not be available in case where the undisclosed asset/income has been discovered as a result of or in respect of which proceedings have bee initiated by way of Governmental investigation/enquiry.

42. There is only one letter on record which has been mentioned in the assessment order and that letter is from Assistant Director, F.I.A Headquarters, Islamabad dated 5-10-1988 which has been addressed to the Director, Estate Management, C.D.A., Islamabad mentioning the letter date 29-9-1986 of the Directorate Estate Management. C.D.A. giving information that the assessee has purchased Plot No. 78-W, Blue Area, Islamabad. It is not clear from the whole of the assessment proceedings as to when the sail letter was received and in what manner it was received and why it has bees kept pending for so along with the department without any action and they suddenly made the basis for initiation of proceedings in respect of said undisclosed asset and source of investment/income. This cannot be regarded as positive and definite information with the department to have been mad4 available on account of any Governmental enquiry/investigation to have beer conducted against the assessee or for obtaining the said information Moreover, the question, of having remained unattended for such a long time or of keeping the said letter in the department without any action for sufficient long time, remained unanswered and no explanation to that effect was given by the learned D.R. on behalf of the -Department. Merely saying that the Inspector of the department received the above information from the C.D.A. or from any other department was not sufficient to establish that the information to the department in respect of said asset/source of investment was received by the department as a result of any Governmental enquiry/investigation which in fact was not a direct letter clearly relating to the asset of- the assessee regarding the purchase of the plot in question by the assessee. It was indirect information in that respect. It was also obvious from the said letter dated 5-10-1988 of F.I.A. that the enquiry was not against the assessee but it was against someone else. So, such information cannot be regarded as positive and definite information to be available with the department. in respect of purchase of said plot or about the undisclosed asset/income of the assessee. It was also not obvious from the proceedings or from the record that how the said letter came on file or brought on file record. The learned D.R. on a question to that effect conceded that there was no record or proceedings showing the receipt of above letter by the department.

43. In the above circumstances, we are not convinced with the stance of the department that the said information was available with the department prior to the declaration made by the assessee and deposit of tax by the assessee along with the declaration for availing, the amnesty, under the provisions of section 3A of the Act and under section 59D of the Ordinance. The pre-condition for disqualification of the assessee from availing the amnesty under the aforesaid provisions of law has not been established by the department and neither it has been proved to that extent. As it has and under section 17 of the Act were never served upon the assessee, therefore, no notices under section 16(2) of the act and under section 61 of the Ordinance could be issued straightaway and directly without first issuance of notices under the aforesaid provisions' of law. We agree with the contentions of the learned A.R. that the notices under sections 56 and 55 of the Ordinance and under section 17 of the Act have not been served upon the assessee and the entries on the order sheet regarding issuance of such notices were not looked to be in good order and seemed to be manipulated. 44.As regards the plea of the assessee that he did not write or send any letter dated 22-1-1996 which was manipulated on account of certain political rivalry, we are of the view that whenever there is any such specific denial of existence of signatures of any person on a document/paper then the said signatures are to be compared through naked eye or if possible to be got compared through hand writing expert with the other signatures of the person so available or with the fresh signatures of the person.

45. As we already found above that the assessee has not been served with the notices under sections 56 and 55 of the Ordinance and notices under sections 17 and 16(2) of the Act, requiring him to file income tax and wealth tax returns, all the subsequent proceedings in the case of the assessee are therefore, held to be irregular and against the provisions- of relevant law and as such having no legal effect. In the case in hand, we have noticed that many points/questions remained unanswered on the department side regarding the fact as to how the department received/discovered the information about the purchase of said plot by the assessee and whether the department positively discovered before the declaration of the assessee was filed under the amnesty scheme or later on and what was the proof of the said information/discovery and what was the process of discovery of the said information of the asset to have been issued by the department and why the department remained silent for such a long time over a letter of the year 1988 and then initiated the proceedings in 1995.

48. As we have discussed in detail every aspect of the case and also about the proceedings conducted by the Assessing Officer, therefore, we are of the considered opinion that the case of the assessee has not been conducted and processed in a lawful and regular manner and whole of the proceedings have been conduced in an irregular manner greatly prejudicing the rights of the assessee and without affording him opportunity of being heard in a fair acid proper manner and the orders have been passed denying him the right of opportunity of being heard which can never be sustained in the eye of law. We agree with the contentions of the learned A.R. that the case of the assessee was not that of setting aside of assessment for de novo proceedings as has been done by the learned first appellate forum but was that of cancellation of assessment orders and annulment of assessment. We are of the view that, the assessee has rightly availed the amnesty under section 3A of the Act and under section 59D of the Ordinance which were corresponding provisions in the relevant laws and the amnesty availed under section 3A of the Act was also applicable to the assessee on both income tax and wealth tax side and .the assessee deposited the prescribed tax at Rs.725,640 at 7.5% along with declaration as required by the said amnesty scheme under the law. The benefit of irregular proceedings obviously would go to the assessee because these proceedings prejudiced the case of the assessee at a great length. In such a case while relying on the dictums of the Superior Courts and specifically while applying rule of "audi alterem partem", the assessee is to be benefited as a whole while keeping in view the situation emerging, in favour of the assessee.

47. In the above circumstances,. we hold that the assessment order as well as the orders of the learned first appellate forum are liable to be cancelled and the assessments to be annulled. Accordingly, we cancel the assessment order and the order of the learned first appellate forum and annul the assessment as framed by the Assessing Officer for all the assessment years under consideration.

48. Consequently, the appeals filed by the assessee succeed and stand disposed of accordingly. C:M.A./M.A.K./91/Tax(Trib). Appeals accepted.