2005 PLP (Trib (PTD)

The department through seven appeals has objected to the relief allowed by the learned CWT(A) reducing rent of let out five properties. While the assessee has objected the impugned order on the following grounds:‑‑ (i) That the order passed by the Assessing Officer under‑section 16(3) of the revoked Wealth Tax Act, 1963 for the years under review i.e. 1994‑95 to 2000‑2001 were hit by the limitation and therefore, were beyond the jurisdiction of the Assessing Officer and the learned CWT(A) has without any justification held that the assessment order was within time. (ii) It has been further contended that assessments completed for the years under appeal are void and illegal, as the Wealth Tax Act, 1963 has already been abolished and in the light of the order in W. T. A. No. 1568/LB of 2001, no case can be processed after, 1‑7‑2002. (iii) That the notice for the previous assessment years was to be issued under section 17 of the Wealth Tax Act, 1963 whereas assessment was completed on the basis of notice issued under section 14(2) which is illegal and unlawful. (iv) That assessment was made on the basis of combined notice under section 14(2) for seven years which is illegal. (v) That the valuation of constructed property assessed other than the way prescribed by Rule 8(3) of the Wealth Tax Act, 1963 is illegal and unjustified. (vi) Valuation of Residential House, Civil Lines, Business Premises Noor Baba, 1/6th share in inherited residential house in Mohalla Islamabad, 1/6th share in inherited residential house Mohalla Islamabad, 1/6th share inherited residential house, Asghar Street, 1/6th share in inherited residential house, Noor Baba all situated in Gujranwala has also been objected. The assessee has also objected the value of the let out properties. Mr. Muhammad Shahid Abbas, Advocate has appeared on behalf of the assessee and has contended that the Assessing Officer for all the years under review has issued notice on 5‑11‑1998 under section 14(2) and the assessment order has been passed on 30‑6‑2003 while he should have completed the assessment on or before 30-6‑2001, as in part (b) of subsection (1) of section 17A, the time limit for completion of assessment has been provided as two years from the date of furnishing of a return or a revised return. He has, in this respect, placed reliance on the latest decision of this Tribunal in this regard reported as (2004) 89 Tax 309 (Trib) wherein it has been held that the period of limitation in case where return is filed shall be two years and not four years from the end of assessment year in which net wealth was assessable. It has been further observed in that judgment that the part of clause (b) has simply empowered that wealth tax assessment could be framed for the last five years as is evident from the corresponding provision under the Income Tax Law but in the second situation, where the return has been filed, then in respect of such cases, the assessment has to be framed within two years from the date of filing of a return or a revised return. The learned counsel has further contended that assessment order in this regard has been passed after the limitation prescribed under the law and is, therefore, liable to be vacated. The second objection of the learned counsel for the assessee on the assessment order is that as per the assessment order, statutory notice for, all the years under review was sent under section 14(2) rather it should have been sent under section 17‑A and therefore, the assessment is liable to be vacated. He has, in this respect, placed reliance on the decision of this Tribunal reported as 2002 PTD (Trib.) 2512 wherein it has been held that the initiation of proceedings by issuing notice under section 14(2) of the Wealth Tax Act, 1963 beyond the relevant assessment year is not legal. It has been held that the assumption of jurisdiction under other, than a legal provision was not a procedural mistake and being fatal to the whole proceedings, could not be ignored by the appellate authority. It has been observed in that judgment that if it was considered that on the basis of submission of return on receipt of an invalid notice, the proceedings could not be challenged that would amount to discrimination against the person who submitted that return vis‑a‑vis a person who did not submit a return in response to an invalid notice and under the law, no discrimination could be made, as all the assessees are to be treated equally as provided, under the Constitution. The learned counsel, has further contended that the Assessing Officer has issued combined notice under section 14(2) instead under section 17(1)(b). According to the learned counsel, the valuation of the properties has been made in violation of Rule 8(3) of the Wealth‑Tax Rules and declared ALV has been enhanced without prior approval of the IAC which is the mandatory requirement under the law. On the other hand, Mr. Anwar Ali Shah, learned DR has contended that wealth tax assessment has been made within time, as notices for filing of returns was issued during the period when the Wealth Tax Act was intact and therefore, further proceedings has been started during the existence of Wealth Tax Act, 1963 and finalizing of the same after, abolishment of Wealth Tax Act, 1963 did not suffer from any legal infirmity. He has contended that there is no limit for completion of assessment in Wealth Tax Act on the basis of notice issued under section 14(2) of the Wealth Tax Act and the assessment can be completed within two years from the date of filing of return and assessment has been completed in this case within the prescribed limit. According to the learned DR, notice sent under section. 14(2) is also in accordance with law. Regarding valuation of different properties, the learned DR has submitted that the valuation has been made by the Assessing Officer in accordance with Rule 8(3) and the learned CWT(A) without any justification has reduced the rent of let out properties without giving any cogent reasons. He has contended that the rent of each and every property was estimated keeping in view the rental values available in that vicinity and in the absence of any tent agreement, rent receipts, rent deed or any other document, the only way to assess the value was to make the assessment on the basis of adjacent vicinities. We have heard the learned representatives of both the parties and have also perused the consolidated impugned order of the learned CWT(A) and the assessment order. Regarding issue of limitation, we have found that as per the assessment order, the returns for all the years under review have been filed by the assessee on 30‑6‑2001 and the assessment order has been passed on 30‑6‑2003 and under part (b) of subsection (1) of section 17A, the time limit for completion of assessment has been provided as two years from the date of furnishing of‑return. We are of the view that in this case, the Assessing Officer has tried to cover up the limitation period and has passed the order on 30‑6‑2003 without considering the fact that two years has already, been expired even if the contents of the assessment order are believed to be correct on 29‑6‑2003. We are, however, of the view that the contention of the learned counsel for the assessee that period of two years will be from the date of issuing of notice or the start of proceedings has no force, as provision of law has clearly mentioned that the period will start from the date of furnishing o a return. Likewise, second legal objection raised by the assessee is also forceful that the notice has been sent under section 14(2) while it has been contended on behalf of the assessee that notice should have been sent under section 17(1)(a), as assumption of jurisdiction in different periods of time was subject‑matter of different provisions of law. During the financial year, proceedings for processing the return were to be taken under section 14(2) of the Wealth Tax Act, 1963 and after the end of the assessment year, the jurisdiction could be assumed only under section 17 of the Wealth Tax Act, 1963 and there was no concept in law of having concurrent and simultaneous jurisdiction under both the provisions of law i.e. section 14(2) and section 17 of the Wealth Tax Act, 1963. We are of the view that initiation proceedings by issuing notice under section 14(2) of the Wealth Tax Act, 1963 beyond the relevant assessment year is not valid, as assessment proceedings could not be initiated beyond the assessment year by issuing a notice under section 14(2) of the Wealth Tax Act, 1963. We have noted that this Tribunal in a decision which has been referred by the learned counsel for the assessee reported as 2002 PTD (Trib.) 2512 as specifically held that the assumption of jurisdiction under a provision other than a legal provision of law was not a procedural mistake and being fatal to the whole proceedings could not be ignored by the appellate authority. Even the filing of return in response to a invalid notice did not debar the appellant from challenging jurisdiction because even consent of the assessee could not be given jurisdiction to an authority which did not legally vest with the said authority and the order passed by the said authority was void and nullity in the eye of law. Even if both the sides have agreed to wave portion of a statutory provision, the same could not confer jurisdiction, which according to the statute was not there. The assessing authority has jurisdiction over the case in two ways firstly, as officer in charge over the area of the cases and secondly, to exercise the statutory powers for assessment. Section 10(5) of the Wealth Tax Act, 1963 pertained to assignment of administrative jurisdiction to an Assessing Officer by his superior authorities. This means the jurisdiction assigned generally to a circle in the field pertaining to the area or a person as prescribed in section 10(1)(c) of the Wealth Tax Act, 1963. Exercise of legal jurisdiction for assessment proceedings is the foundation of the legal orders and therefore, can be challenged at any stage because it went to the very root of the assessment order. When the relevant financial year already expired and no notice under section 17 of the Wealth Tax Act, 1963 has been served on the assessee after the end of the assessment year, the Assessing Officer had no jurisdiction to proceed by issuing notice under section‑ 14(2) of the Wealth Tax Act, 1963 and in consequence of that notice, the order passed is ab initio void. We are therefore, of the view that in the present case, the Assessing Officer has no jurisdiction to pass the assessment order after issuing notice under section 14(2) and the returns filed by the assessee cannot be treated as a return under section 15, but these were the returns which were not filed by the assessee suo motu or voluntarily, but are within extended time given for the compliance of notice under section 14(2) which has been held as invalid notice. This being the position, the whole superstructure created by the Assessing Officer or subsequently by the learned CWT(A) falls because basis notice under section 14(2) is illegal, invalid and void. We, therefore, annul the consolidated assessment order for all the seven years under review. All the seven appeals filed by the assessee are allowed and the cross‑appeals filed by the department for the years under review are dismissed. As we have decided all the fourteen cross‑appeals on the legal issues raised in the matter, therefore, the other grounds of appeal need not to be adjudicated. All the fourteen cross‑appeals are decided in the manner as indicated above. C.M.A./307/Tax(Trib.) Assessee's appeal accepted.