1968 PLP 741 (PTD)

WAHIDUDDIN AHMAD, C. J.‑This is a petition under Article II of the Laws (Continuance in Force) Order, 1958, praying for the issue of a writ of certiorari, seeking quash ment of the notice of demand, dated the 8th of February 1960, issued by the Income‑tax Officer, Jhang (respon dent No. 1), by virtue of which the petitioner was ordered to pay a sum of Rs. 4,775 as income‑tax.

2. It is alleged by the petitioner that during the financial year ending 31st of March 1950, he was carrying on business of buying and selling cloth. He also held a share in Messrs Chiniot Wholesale Cloth Syndicate and derived income from property, and he was being assessed from the assessment year 1947‑48 in his individual status as a proprietor of a firm named and styled as M/s. Muhammad Amin Maqsood Ahmad, Karkhana Bazar, Lyallpur, by the Income‑tax Officer, Lyallpur. For the assessment year 1950‑51, i.e., for the year ending the 31st of March 1950, also he was assessed by the income‑tax Officer, Additional B‑Ward, Lyallpur, as a total income of Rs. 9,778.

3. It appears that towards the middle of January 1956, a Bailiff from the Income‑tax Department sought to recover a sum of Rs. 4,775 from the petitioner for the assessment year 1950‑

51. On inquiry, it was learnt that this demand had been created by the Income‑tax Officer, Jhang, who it was said, assessed the petitioner ex parte for the same year. Thus, it being a case of double assessment, the petitioner approached the Income‑tax Officer, 1st Additional A‑Ward, Lyallpur, who informed the Income‑tax Officer, Jhang, that a demand of Rs. 743 had already been created and paid by the petitioner and that a duplicate assessment for the same assessment year had wrongly been made by him, against the petitioner and wrongly sought to be recovered from him. In this connection, the learned Officer observed as under: "I have the honour to say that one Mr. Muhammad Amin was assessed in this Ward for the assessment year 1950‑51 under style M/s. Muhammad Amin Maqsood Ahmad, Karkhana Bazar, Lyallpur. This file was received from I. T. O., Jhang as the assessee was formerly doing business at Chiniot. Tax of Rs. 743 was assessed for 1950‑51 in the status of `indl' and this tax was paid by the assessee. It now appears that your Bailiff, Faizullah, has D. N. for Rs. 4,775 in the name of Muhammad Amin, who is styled as the proprietor of Maqsood Cloth House. It appears that double assessment has been made in this case at Jhang because in the assessment for 1950‑51 assessee's income from Wholesale Cloth Syndicate, Jhang, as well as his personal income has been duly considered. In the circumstances the demand of Rs. 4,775 had been wrongly created."

4. The petitioner further filed Revision Petition No. R‑10/J.G.‑55 under section 33‑A of the Income‑tax Act (hereinafter referred to as the Act) before the Commissioner of Income‑tax, praying that the order of the Income‑tax Officer, Jhang, dated the 19th of February 1955, was a duplicate assess ment and since he had already been assessed to tax under the Act, the duplicate assessment being void at law be annulled. He also brought to the notice of the Commissioner of Income‑tax that he was being assessed to income‑tax by the Income‑tax Officer, Lyallpur since 1946‑47 and that 1950‑51 was pot the only year for which he had been assessed under the name and style of Muhammad Amin Maqsood Ahmad, Karkhana Bazar, Lyallpur, but that he was being assessed under that name and style since 1946‑

47. The petitioner further averred that it was under this name and style that the assessment of Muhammad Amin Maqsood Ahmad had been completed up to the assessment year 1952‑53 and that the assessment had been completed as far back as the 27th of July 1954, while the assessment at Jhang, was completed on the 19th of February 1955. The learned Commissioner of Income‑tax instead of hearing the revision petition filed by the petitioner after notice to him in exercise of his suo motu powers, under subsection (1) of section 33‑A of the Act, set aside the assessment for the year 1950‑51 created by the Income‑tax Officer, Lyallpur, by order dated the 14th of December 1959. So far as the revision petition filed by the petitioner was concerned, he rejected it by an ex parte order, dated the 26th of December 1959, without notice to the petitioner. The petitioner in this writ petition challenges both these orders passed by the Commissioner of Income‑tax.

5. In support of the petition, Mr. Muhammad Amin Butt, learned counsel for the petitioner has urged that the most impor tant questions involved in this matter are :‑ (1) Whether the Income‑tax Officer Jhang, was competent to assess the petitioner for the assessment year 1950‑51, and (2) Whether under section 33‑A of the Act the Commis sioner of Income‑tax could annul the assessment of the petitioner made by the Income‑tax Officer, Additional B‑Ward, Lyallpur, so as to legalise the creation of a larger demand made by the Income‑tax Officer, Jhang.

6. It is not disputed on behalf of the Department that the petitioner was assessed as an "individual" in the year 1946 by the Income‑tax Officer, Sheikhupura, and thereafter up to the year 1950‑51 by the Income‑tax Officer at Lyallpur. According to the Department, it was on the written request dated the 19th of January 1955, of Muhammad Shafique, the alleged attorney of the petitioner, that the file was transferred from Lyallpur to Jhang, as the petitioner himself was residing there and File No. 1310/T. R. pertaining to the petitioner already existed in Jhang Circle. Statutory notices under sections 22 (2) and 22(4) were respectively issued to the petitioner who either evaded or refused service. Consequently, assessment had to be completed ex parte, creating a demand of Rs. 4,

775. It will be noticed that the Income‑tax Officer had assessed the petitioner for the same assessment year on a total income of Rs. 9,778 in a regular manner on the 27th of July 1954, while the Income‑tax Officer, Jhang at Maghiana, assessed him on a total income of Rs. 27,200 by his order, dated the 19th of February 1955.

7. The pivotal question, therefore, for consideration in Ibis writ petition is whether, in the circumstances of the present case, the Income‑tax Officer, Jhang, was competent to assess the petitioner ex parte on the 19th of February 1955, after he had been assessed for the same assessment year on the 27th of July 1954, by the Income‑tax Officer, Additional, B‑Ward, Lyallpur, in a regular manner. It is easier to answer this question if we are able to determine which of the two Income‑tax Officers had jurisdiction in the matter. In face of the admission by the Department that the petitioner was assessed as an "individual" in the year 1946 by the Income‑tax Officer, Sheikhupura, and thereafter up to 1950‑51 by the Income‑tax Officer, Lyallpur, there is little doubt left in our mind that the Income‑tax Officer, Jhang, had no jurisdiction in the matter. The Department seeks shelter behind the written request, dated the 19th of January 1955, of Muhammad Shafique, the alleged attorney of the petitioner. It is stated in paragraph 7 of the written statement put in y the Department that it was on the written request of Muhammad Shafiq, Attorney of the petitioner, that the file was transferred from Lyallpur to Jhang because the petitioner was residing at Jhang. The petitioner, on the other hand, has denied this allegation. Assuming for the sake of argument that the allegation is correct, it is difficult for us to believe that after the transfer of the file from Lyallpur to Jhang the Income‑tax Officer, Jhang, did not notice that the petitioner had already been assessed by the Income‑tax Officer, Lyallpur. It is contended by Sheikh. Abdul Haque, learned counsel for the Department that statutory notices under sections 22(2) and 22(4) of the Act were respec tively issued to the petitioner who either evaded or refused service and it was in these circumstances that assessment had to be completed, creating a demand of Rs. 4,775 on 19th of February 1955. In our opinion, the contention of the learned counsel has no force because the matter clearly fell within the territorial jurisdiction of the Income‑tax Officer, Lyallpur. The alleged request for transfer of the file from Lyallpur to Jhang is said to have been made op the 19th of January 1955, which apparently was done much after the date of assessment by the Income‑tax Officer, Lyallpur. Moreover we are of opinion that agreement of a party cannot confer jurisdiction on a Tribunal which it does not otherwise possess according to law. In these circumstances, we hold that the Income‑tax Officer, Jhang, had no jurisdiction in the matter and it is quite clear to us that the order of the Income‑tax Officer, Jhang, dated the 19th of February 1955, being without jurisdiction, is a nullity and void in the eye of law.

8. The next question calling attention, in the circumstances of the present case, is whether the learned Commissioner of Income‑tax, North Zone, West Pakistan, Lahore, was competent to set aside the order of the Income‑tax Officer, Lyallpur, and to maintain that of the Income-tax Officer, Jhang. As we have already pointed out, the petitioner was being assessed at Lyallpur from 1947 right up to 1951 in his individual status as proprietor of M/s. Muhammad Amin Maqsood Ahmad Karkhana Bazar, Lyallpur. In view of this, the observation of the learned Commissioner in his order, dated the 14th of December 1959, that it had been brought to his notice by tire Income‑tax Officer that at the petitioner's own request his case was transferred to Rang where the Income‑tax Officer had opened a regular file for the assessee in the name of M. Muhammad Amin, Chiniot (GIR‑451) cannot hold ground. The request, if any, was made much after the creation of the assessment made by the Lyallpur Income‑tax Officer and could not form the basis of afresh assessment by the Income-tax Officer, Jhang. Everything else apart, both the impugned orders of the learned Commissioner of Income‑tax offend against the principle of natural justice. The order, dated the 14th of December 1959, is prejudicial to the interests of the petitioner inasmuch as the assessment which made him liable to a lesser amount was set aside. It was, therefore, incumbent on the learned Commissioner of Income‑tax to pass an order to his disadvantage after notice to him. The decision of the Judicial Committee reported as Commissioner of Income‑tax West Punjab, North‑West Frontier and Delhi Provinces, Lahore v. Tribune Trust, Lahore (P L D 1947 P C 247), cited by Sheikh Abdul Haque, learned counsel for the Department, has no application to the facts of the present case. Similarly, the order, dated the 26th of December 1959 was also passed without notice to the peti tioner whose grievance that the Income‑tax Officer, Jhang, had no jurisdiction in the matter was of vital importance and related to the territorial jurisdiction of the Officer concerned. Since the Commissioner of Income‑tax has confirmed the order of the Income‑tax Officer, which was passed ex parte, it was his duty to have given the petitioner an opportunity of being heard. It is also doubtful that the learned Commissioner of Income-tax could pass the above‑mentioned two orders in respect of the orders of the Income‑tax Officers which were apparently passed more than one year before he interfered with them. Under proviso (1) to section 33‑A (1) of the Act, the Com missioner of Income‑tax could do so only after recording reasons in writing which do not find mention in both these orders. We would, therefore, set aside the orders of the learned Commissioner of income‑tax, referred to above.

9. After a careful consideration of the matter, we are satisfied that the Income‑tax Officer, Lyallpur, had full jurisdic tion in the matter when he assessed the petitioner, that the Income‑tax Officer, Jhang, had no jurisdiction in the matter because since 1946 the petitioner had either been assessed by the Sheikhupura Income‑tax Officer or by the Lyallpur Income-tax Officer and that the Jhang Income‑tax Officer had never dealt with the case. In fact, from the letter written by the Income‑tax Officer, Lyallpur, reproduced above, it is plainly clear that before the assessment of the petitioner was made by him, he had already received the file from the Income‑tax Officer, Jhang, as the assessee was formerly doing business at Chiniot. In these circumstances, it cannot be said that the learned Income‑tax Officer, Lyallpur, in any way usurped the jurisdiction of the Income‑tax Officer, Jhang or that he acted illegally or without lawful authority, in assessing the petitioner. It was urged by the learned counsel for the Department that the petitioner had not disclosed his correct income to the Income-tax Officer, Lyallpur, that the petitioner had been doing business in the names of bogus persons for his own benefit and that it was not a fit case for our interference in writ jurisdiction. The contention of the learned counsel has not impressed us, because if any income of the petitioner has escaped assessment, there were other methods available with the Department to re‑open the case and to assess his property. The method and manner in which the Income‑tax Department has dealt with the case of the petitioner are not permissible in law and cannot be allowed to stand simply for the convenience of the Department, We would, therefore, quash the order of the Income‑tax Officer, Jhang, and the two orders of the Commissioner of income tax and hold that proper assessment made in this case was the one made by the Income‑tax Officer, Additional, B‑Ward, Lyallpur, by his order, dated the 27th of July 1954. It will, however, be open to the Department to take such steps to protect their interests as may be permissible to them in law with respect to the alleged escaped income of the petitioner.

10. In the result, subject to the remarks made above, this petition is allowed with costs. A. E. Petition allowed.