2003 PLP (Trib (PTD)

(v) That the GALV adopted by the Assessing Officer in respect of shop at Azam Market, Sargodha was too much excessive, harsh and improper and that this valuation was against the past history of the case; (Common for all the years under consideration); and (vi) That the additional tax imposed by the Assessing Officer was without calculation and separate order. (Common. for all the years under consideration).

3. Hence the prayer through these appeals for the acceptance of the appeals or in the alternative granting of such other relief as the circumstances of the case warrant.

4. Hence the above appeals.

5. We have heard the learned representatives of the parties and have perused the orders of the forums below.

6. Briefly the relevant facts as arise from the combined assessment order for the assessment years 1997-98 and 1998-99 are that the assessee being an individual did not file the returns for the years under consideration. The Assessing Officer issued notice under section 14(2) of the Wealth Tax Act, 1963 (hereinafter called the Act) which was served but remained without any compliance. Then notice under section 16(4) was issued but that too remained without any response. Accordingly, the Assessing Officer proceeded to frame ex parte assessment under section 16(5) of the Act. While making valuation of share in House No. 821-D, Satellite Town, Sargodha, the Assessing Officer, on account of non-response of the assessee to the notices under section 14(2) and 16(4) of the Act, estimated gross annual letting value (GALV)) of the share of the assessee at Rs.50,000 and determined the value of the said share at Rs.500,000 each for the years under consideration. Similarly, the Assessing Officer estimated the gross annual letting value (GALV) of 1/2 share of the assessee in shop situated in Azam Market, Sargodha at Rs.48,000 and adopted the value of the share of the assessee at Rs.480,000 each for the said years. The Gross Annual Letting Value of three Shops Nos. 14, 46 and 47 in Azam Market, Sargodha was estimated at Rs.98,000 and their value was estimated at Rs.980,000 each for the said years. Finally the Assessing Officer calculated taxable wealth of the assessee at Rs.1,508,000 each for the said years after allowing statutory exemption.

7. In respect of assessment year 1999-2000, the Assessing Officer estimated the value of Shop No. 11, Azam Market, Sargodha and 3 shops in Azam Market, Sargodha as per history of the preceding years at Rs.480,000 and Rs.980,000 for the said properties respectively. For 3 shops in Block-B, Satellite Town, Sargodha, the Assessing Officer estimated its GALV at Rs.30,000 and determined value of the said shops at Rs.300,

000. In respect of House No.23-M, Satellite Town, Sargodha, the Assessing Officer estimated in GALV at Rs.40,000 and determined its value at Rs.400,000 and finally calculated taxable wealth of the assessee at Rs.1,220,000 for assessment year 1999-2000.

8. It may be mentioned here that the assessee for the assessment year 1999-2000 submitted wealth tax returns and declared his properties as detailed in the assessment order and the assessment has been framed under section 16(3) of the Act.

9. Against the above treatment, the assessee went in appeal before the first appellate forum and the learned Appeal Commissioner vide impugned order observed and found as under:-- "The original order under section 16(5) for the charge years 1997-98 and 1998-99 was framed as on 14-9-1999. On 30-5-2000, the order under section 16(5) for these two years was rectified under section

35. Since, the order has been rectified and the assessee has not challenged this order, therefore, the order framed under section 16(5) for 1997-98 and 1998-99 has no worth after rectification. Since, the order has been rectified under section 35 and the assessee has not filed am appeal against it nor the AR has contested the treatment meted out as a result of action under section 35, therefore, no action is called for in this case. As far as the treatment meted .out to the assessee for the assessment year 1999-2000, the assessee wealth is absolutely in accordance with the treatment accorded in the previous year which calls for no interference, hence, confirmed."

10. Now the assessee has impugned the said action before us.

11. The learned AR of the assessee reiterated the grounds of appeal as raised by the assessee with the memo. of appeals and contended that in fact the assessee simultaneously filed rectification application under ,section 35 with regard to assessment years 1997-98 and 1998-99 against ex parte assessment order and also filed appeals before first appellate forum against the said order. He stated that rectification application of the assessee filed before the Assessing Officer under section 35, was accepted in respect of two properties consisting of 1/2 share in House No. 821-D, and Plot No. 18, Block-Z, Sargodha and the rectification was made accordingly with regard to said properties. He further contended that the learned Appeal Commissioner has not adjudicated the appeals of the assessee on the grounds as raised before him with regard to assessment years 1997-98 and 1998-99 and the learned Appeal Commissioner remarked that no action was called for in this case for the reason that the assessment order stood rectified under section 35 and the assessee has not filed appeal against the said order and nor the AR of the assessee contested the treatment meted out as a result of action under section

35. He further contended that the learned Appeal Commissioner .was legally bound to decide the appeals of the assessee on merits despite the fact that the assessee also availed remedy of seeking rectification of the order under section 35 and some of the relief was allowed to the assessee through the said rectification application. He then tried to draw a distinction between right of appeal and right of rectification available under section 23 and under section 35 of the Act and contended that both these rights are independent of each other and both the appeal and rectification application are to be decided in accordance with the said provisions and further that right of appeal being a substantive right required adjudication on merits in accordance with law. On a question by the Bench, as to whether the rectification order stood merged with the assessment order and what would be the effect of merger of one order into other, on basis of the doctrine of merger, the learned AR of the assessee vehemently contended that the right of appeal is an independent right and cannot be taken away simply for the reason that an order has been passed by the Assessing Officer in the rectification application filed by the assessee.

12. On the other hand, the learned DR contended that the rectification order passed under section 35 stood merged with the assessment order and the assessee should have filed appeal against the rectification order passed under section 35 and therefore, the appeals of the assessee before the first appellate forum became infructuous and it was rightly held by the learned Appeal Commissioner that no action was called for in the case.

13. Now, before we proceed further with the other aspects of the facts on the basis of merits of the case, we may firstly like to take up this issue.

14. From the facts as have been stated by the learned AR of the assessee and also reflected in the impugned order, it was obvious that assessment for the assessment years 1997-98 and 1998-99 was finalized ex parte under section 16(5) on 14-9-1999. Thereafter, the assessee filed rectification application which was decided by the Assessing Officer on 30-5-2000. The first appeals against the said assessment order were filed on 12-7-2000 as indicated in the column of Date of Institution given in the impugned order of the first appellate forum. The learned Appeal Commissioner in respect of appeals for assessment years 1997-98 and 1998-99 has observed that since the order has been rectified and the assessee has not challenged this order and therefore, the order framed under section 16(5) for assessment years 1997-98 and 1998-99 has no worth for rectification and that since the order has been rectified under section 35 and the assessee has not filed appeal against it nor the AR has contested the treatment meted out as result of action under section 35 and therefore, no action is called for in this issue. From these observations and consequent conclusion of the learned Appeal Commissioner, we do not feel convinced with the reasons advanced by the learned Appeal Commissioner with regard to his taking no action in respect of appeals of the assessee for the assessment years 1997-98 and 1998-99. How an order passed under section 16(5) looses its worth after some part of its stands rectified through proceedings under section 35 of the Act? This reasoning does not appeal to the mind. It can at last be that the part of the assessment order under section 16 which stood rectified under section 35 may stand rectified as such and the order under section 35 may stand merged in the assessment order but the remaining part remains in tact. However, for appeal purposes, the original order under section 16 would remain available for to be appealed against because the matters in appeal are adjudicated in a different perspective and are put to a scrutiny by a higher forum within the prescribed powers under appeal provisions. The matters which are brought to same forum for rectification are judged on totally different parameters which remain confined to the scope of rectification under the relevant provisions in the context of mistakes apparent from record in the said order. Therefore, we are of the considered opinion that first appellate forum cannot take off its hands from deciding an appeal, filed against an assessment order only for the reason that an order has been passed in rectification application filed by the assessee who also filed appeal against the same assessment order. Both the provisions of law relating to appeal under section 23 and rectification under section 35 are separate independent of each other having limitations within their defined scopes. Even otherwise these provisions obviously have a distinction of forums to be approaches by the parties. For Appeals, the forum is always a higher forum and right of appeal is considered a substantive right provided under the law. On the other side, for Rectification, the forum remains the same where mistakes in its own order are rectified either on its own motion/suo motu or if such mistakes are brought to its notice by any of the parties. Moreover, there is no bar in the law for exercising both the options simultaneously. The matters under the said provisions are decided in different perspectives of adjudication of rights of parties to that effect. The law does not create any embargo for availing both the remedies at the same time. It can be simultaneous or it can be one after the other because the forum which is seized of it is different in the case of Appeal and different in the case of Rectification. The scope of rectification is limited and can never be equated for judging the impugned order on the parameters and the extent of scrutiny as is made by the appellate forum. Therefore, we hold that an order passed under section 35 for rectification of mistake cannot take away the right of appeal 'provided under section 23 or bars any further action or adjudication of appeal by the authority concerned who is to apply his mind independently and adjudicate grounds and issues raised before him within the sphere of its powers as prescribed under the law. To our view, the action of learned Appeal Commissioner in that regard was not legally sustainable. He was obliged under the law to have decided the appeals for the assessment years 1997-98 and 1998-99 on merits while keeping in view the grounds raised by the assessee and the contentions of the AR of the assessee.

15. As a result of above discussion, it is deemed appropriate to remit the case to the learned Appeal Commissioner for re-decision of the appeals of the assessee which shall be considered as pending before hint with regard to assessment years 1997-98 and 1998-99 and which may be decided through a speaking order on merits in accordance with law after providing an opportunity of being heard to the assessee and while considering the grounds as may be pressed and the contentions as may be raised on behalf of the assessee. Accordingly, the case is remanded back to the learned Appeal Commissioner for deciding the Appeals of the assessee for the assessment years 1997-98 and 1998-99 afresh in the light of observations and directions as given above. Resultantly, the assesee's appeals for the assessment year 1997-98 and 1998-99 shall succeed to the extent indicated above.

16. With regard to assessment year 1999-2000 again it would be more proper to send the case back to the learned Appeal Commissioner for re-decision of appeal because the learned Appeal Commissioner has confirmed the treatment of the Assessing Officer for the said year while terming the same to be absolutely in, accordance with the treatment accorded in the previous year. Therefore, he will have to give his findings afresh for the assessment year 1999-2000 because he has been directed to re-decide the appeals of the previous assessment years 1997-98 and 1998-99 and the matter as a whole is to be re-thrashed by him. Therefore, the learned Appeal Commissioner is directed to pass an order afresh in appeal for the assessment year 1999-2000 as well and the case shall stand remanded back to him.

17. Consequently, the assessee's appeals succeeded to the extent and in the manner indicated above. C.M.A./789/Tax (Trib.) Appeal accepted.