2005 PLP (Trib (PTD)

1. This appeal at the instance of the assessee-appellant is directed against the order passed by CIT(A) Zone-I, Lahore, dated 4-11-1995 in respect of assessment year, 1992-93.

2. Main thrust of the learned counsel for the assessee relates to assumption of jurisdiction over this case by DCIT Circle-05 Companies-I, Lahore. In this regard it was contended that once the Appeal Commissioner had come to the conclusion that the assessment framed was without jurisdiction and even that was not sustainable to be a best judgment, in such circumstances the assessment order should have been cancelled or annulled instead of setting aside the same for fresh proceedings.

3. On behalf of the assessee-appellant Mr. Muhammad Yousaf ITP was present and has been heard at a great length. While none has prosecuted on behalf of the Revenue despite proper intimation at the relevant quarter by way of sending call notice. It is, therefore, decided to proceed ex parte on merits in absence of the DR by resort to Rule 20(2) of the Income Tax Appellate Tribunal's Rules, 1981.

4. Facts leading for disposal of the issue in hand are that no suo motu return was filed by the assessee in the office of the Circle-05 Companies Zone-I, Lahore. Thereafter, notices under sections 56 and 61 were issued which could not be got served upon the assessee-appellant. However, the reply furnished in response to the notice subsequently issued under section 61, it was- informed to the DCIT Circle-05 Companies Zone-I, Lahore that the return, for the year under consideration had been filed in Circle-05, Faisalabad which was later on transferred to Multan, Zone Multan on the point of jurisdiction. To substantiate the contention, copy of inter-zonal transfer memo. indicating that the assessment record in the subject case had been transferred to Multan Zone by the Commissioner of Income Faisalabad on 6-3-1995 which was annexed with copy of a letter issued from DCIT Circle-5, Faisalabad to DCIT. Companies Circle, Vehari bearing No.448, dated 2-1-1995. It was, accordingly, prayed that the proceedings initiated under sections 56 and 61 may be dropped. On enquiries conducted, it was noticed by the Assessing Officer that the record has not been transferred from Faisalabad to Commissioner of Income Tax Multan. Accordingly, the assessee was required to file its return of income for the year under appeal. In response thereto, a representation was made to the Commissioner of Income Tax Companies, Zone-I, Lahore stating that since the factory premises of super cotton is located at Burewala and according to the new zones and circles created by the C.B.R. the assessee's file may be transferred from Faisalabad to Multan being the factory is located in Multan Region. This representation was turned down by the Commissioner of Income Tax Lahore. Later on the assessee had, also chosen to make representation to the RCIT Zonal Region Faisalabad. Without waiting the reply of this representation, the Assessing Officer proceeded to finalize ex parte assessment by resort to section 63 of the Income Tax Ordinance, 1979. After, having observed that since the assessment for the year under appeal was getting barred by time and a go-ahead signal was also given by the Commissioner of Income Tax Companies Zone-I, Lahore to formulate the assessment vide letter, dated 10-6-1995, the order was passed at net income of Rs.16,00,000 by estimating sales and applying gross profit rate thereon and after deducting expenses on estimate basis from the gross profit so worked out. This order was challenged before the First Appellate Authority on legal as well as on factual premises. The Appeal Commissioner, after evaluating the facts on record, resorted to set aside the assessment for fresh proceedings. This finding of the Appeal Commissioner has compelled the assessee to come up in appeal before the Tribunal.

5. After weighing pros and cons of the arguments advanced by the learned counsel for the assessee and on perusal of the impugned order we find that the assessee had all along being agitating the question of assumption of jurisdiction by the Assessing Officer Circle-05, Companies-I, Lahore. Examination of the facts spell out that this is not the case of the Department that the factory was not located at Burewala. It is pertinent to mention that the question of jurisdiction of the cases has been laid at rest by the Ordinance which provides that cases of all private limited companies lie within the jurisdiction of the Zone having jurisdiction over the area where the principle place of business of the companies is located. Factum of change of head office of the company has also been recorded by the Registrar Joint Stock of Company Faisalabad at Form xx, dated 7-8-1992 copy of which was duly produced for examination before the Authorities below. In addition to copies of letters issued by the Commissioner of Income Tax Faisalabad, dated 6-3-1995 was also furnished whereby transfer of record from Faisalabad to Multan was specifically mentioned therein. Besides the appellant had time and again pointed out that not only the Zonal Commission of Income Tax of Lahore but also the Assessing Officer Circle-05, Companies Zone-I, Lahore was not vested with jurisdiction over this case rather that was lying with the Zonal Commissioner of Multan. All these documents lead .to the conclusion that the Assessing Officer Circle 05 Companies Zone-I, Lahore should have transferred the record, if any available within him to the Zonal Commissioner Multan in order to finalize the assessment at that stage. Rather the Assessing Officer has wasted a lot of time and indulged himself in fruitless exercise of making correspondence here and there. Viewing the facts of the case in its totality; we have come to an unescapable conclusion that the assessment framed by the DCIT Circle-05 Companies Zone-I Lahore was without lawful jurisdiction as the assessee's head office and the factory premises was located at Burewala over which the jurisdiction to assess the case was vested with the Commissioner of Multan Zone Multan. It is also established principle and norms of justice that in a case where the Appellate Authority, comes to conclusion that the order passed by the Assessing Authorities was without lawful jurisdiction, the appropriate course available .is to cancel/annul that assessment order instead of setting aside the same for de novo consideration. Actually the higher appellate Courts have depreciated remanding the case to the Assessing Authority for de novo consideration for the purposes of covering up his legal lacunas. In view of foregoing discussion we have no hesitation in cancelling/annulling the assessment order passed by Deputy Commissioner of Income Tax Circle-05 Companies-I Lahore, dated 26-6-1995 and vacating that of the Appeal Commissioner so far as assessment year 1992-93 is concerned. It is ordered accordingly.

6. Hence the assessee's appeal stands disposed off. (Sd.) Rasheed Ahmad Sheikh Judicial Member AMJAD ALI RANJHA (ACCOUNTANT MEMBER).

I beg to differ with the findings of my learned brother (Judicial Member) regarding annulment cancellation of assessment on the point of jurisdiction. I have looked into the facts of the case and it is not indicated anywhere as to what has been the fate of the return filed for the assessment year 1992-1993. There is no denying the fact that the factory was plied in the assessment year 1992-1993 and its return must have been filed somewhere. If any income had been earned, it had to be taxed. So in my opinion, CIT (A) has rightly set aside the assessment with the closing para of his order given as under: "Both the assessments having been set aside, re-assessments C should be framed in Multan Zone by the Officer holding jurisdiction at the moment over this case in the light of the accounts submitted and after the service of notices on the appellant." I fully agree with the order passed by CIT(A) and totally disagree with the findings of my learned brother (Judicial Member), C when he states as under:-- "In view of foregoing discussion, we have no hesitation in cancelling annulling the assessment order passed by Deputy Commissioner of Income Tax Circle-05, Companies Zone-1, Lahore, dated 26-6-1995 and vacating that of the Appeal Commissioner so far as assessment year 1992-1993 is concerned. It is ordered accordingly." So in my opinion, assessee's appeal needs to be rejected and CIT(A)'s should be maintained. (Sd.) (Amjad Ali Ranjha) Accountant Member As the difference of opinion has arisen between the members of this Bench, the case is referred to the Hon'ble Chairman for nomination of third member to resolve the following question:

Whether in view of the facts and circumstances of the case, the impugned assessment should be annulled/cancelled or C.I.T.(A)'s order of setting aside the assessment should be maintained? (Sd.) (Sd.) (Rasheed Ahmed Sheikh) Amjad Ali Ranjha Judicial Member Accountant Member RAJA SIKANDAR KHAN (ACCOUNTANT MEMBER)

Difference of opinion arose between the learned members of the Bench of Mr. Rasheed Ahmad Sheikh, Judicial Member and Mr. Amjad Ali Ranjha, Accountant Member. The matter has been referred by the Honourable Chairman to the Third Member to resolve the following question: "Whether in view of the facts and circumstances of the case, the impugned assessment should be annulled/cancelled or CIT(A)'s order of setting aside the assessment should be maintained?" Full facts of the case have been elaborately discussed by the learned Judicial Member vide his Order No. 183/LB/1996 (assessment year 1992-93), dated 23-9-2003. He has given clear finding that since the assessee's head office and the factory premises were located at Bure-Wala which fell in the territorial jurisdiction of Multan Zone, juris diction over assessee's case was vested with the CIT Multan Zone, Multan. Thus he held that assessment of this case made by the Assessing Officer of Circle-05, Companies Zone-I, Lahore was without jurisdiction hence liable to cancellation/annulment. In first appeal, the learned CIT(A) set aside the assessment with the following findings: "Both the assessments having been- set aside, re-assessments should be framed in Multan Zone by the Officer holding jurisdiction at the moment over this case in the light of the accounts submitted and" after the service 'of notices on the appellant." The learned Accountant Member was of the opinion that the CIT(A) has rightly set aside the assessment. Therefore, difference of opinion arose between the learned Judicial Member and Accountant Member on cancellation of assessment being without jurisdiction rather than the setting aside the assessment as was done by the learned CIT(A). The learned Accountant Member agreed with the findings of the CIT(A) that the assessment should be framed in Multan Zone, Multan by the officer holding jurisdiction over this case. Thus the learned Accountant Member conceded that the assessment made by the Income Tax Officer, Circle-05, Companies Zone,-I, Lahore is without jurisdiction. The learned Judicial Member ordered for cancellation/ annulment 'of the assessment made in Circle-05, Companies Zone-I, Lahore because of lack of jurisdiction. Since it is established principle of law that an action taken without lawful jurisdiction is null and void. I agree with the finding of the learned Judicial Member and his order of cancellation/annulment of assessment is endorsed. Assessee appeal succeeds. C.M.A./425/Tax (Trib.) Appeal accepted.\