2003 PLP 2611 (PTD)

(d) Income Tax Ordinance (XXXI of 1979)‑‑‑ ‑‑‑‑S. 65(2)‑‑‑Wealth Tax Act (XV of 1963), S.17(1)(a)‑‑‑Additional assessment‑‑‑" Definite information"‑‑‑Concealment of income‑‑‑Purchase of property by assessee partner of an AOP in his individual capacity‑‑ Non‑filing of return‑‑‑Effect‑‑‑Sale agreement of property entered into by the assessee amounted to "definite information" within the meaning of S.65(2), Expln. of the Income Tax Ordinance, 1979‑‑‑Non‑filing of the return either on the income‑tax side or on the wealth tax side in his individual capacity amounted to concealment of income, falling within the purview of S.65(1)(a) of the Income Tax Ordinance, 1979 and S.17(1)(a) of the Wealth Tax Act, 1963‑‑‑Issuance of notices to the assessee in this behalf was not assailable. Salim Jan Khan for Petitioner. Minhajuddin Alvi for Respondents. Date of hearing: 25th June, 2003. FAZLUR REHMAN KHAN, J.‑‑‑Through the present writ petition, the petitioner, Gulistan Khan Bhittani, has challenged the notices, dated 18‑9‑2001 issued by respondent No.4 one under S.65 of the Income Tax Ordinance, 1979 (hereinafter called the "Ordinance") and the other under S.17 of the Wealth Tax Act, 1963 (hereinafter called the "Act") for the Assessment year 1996‑97.

2. The admitted facts, leading to the filing of this writ petition are that the petitioner is a partner in a Registered Firm "Messrs G.K. Construction Company, Government Contractors" Dera Ismail Khan at NTN 01‑26‑0099238. The petitioner is also a member of an AOP (Association of Persons) of Messrs Gulistan Khan and others, Gulistan Colony, Circular Road, D.I. Khan at NTN 01‑26‑TR‑T 32, consisting of three members, namely, Gulistan Khan, Dr. Iftikhar Khan and Mst. Zalwanay Bibi. According to the petitioner, his Firm filed statement under section 142 of the Ordinance for the Assessment year 1996‑97, showing the receipts of payments, on which, tax deducted thereon was final discharge of the tax liability of the Firm under S.80‑C of the Ordinance. It appears that the Firm of the petitioner did not file any separate return, showing its income from other sources except the above receipts of payments. On the Wealth Tax side the petitioner's AOP filed Wealth Tax Return for the Assessment year 1996‑97, declaring the net value of its wealth at Rs.2,00,

000. However, the declared version was rejected and net value of its wealth was determined at Rs.4,50,

000. During the Assessment year 1996‑97, the petitioner purchased a land measuring 41 Kanals and 10 Marlas for a sum of Rs.2,05,00,000 by an agreement, dated 25‑9‑1995, allegedly for the development of a residential colony, but this transaction was neither shown in the Wealth Tax Return nor the petitioner filed a separate Income Tax/Wealth Tax Return in his individual capacity. Accordingly, respondent No.4 issued a notice, dated 30‑11‑1996 under S.56, followed by notices under S.61, dated 25‑5‑1997 and under S.62, dated 23‑9‑1999 of the Ordinance to the petitioner to file Income Tax Return, explaining the source of investment. The petitioner submitted a reply to these notices explaining the source of investment. However, the explanation was found unsatisfactory. In the meantime, the incumbent of the post of respondent No.4 was transferred and on assumption of the charge, the present respondent No.4 issued the impugned notices, dated 18‑9‑2001. Through the present writ petition, the petitioner has challenged the vires of these notices. Comments of respondents No.3 and 4 were called for, which they submitted.

3. We have heard the learned counsel for the parties and have also perused the record.

4. In the writ petition, the petitioner has taken two objections. Firstly; that by the date i.e. 18‑9‑2001, the impugned notices were issued, the assessments had already become time‑barred and the impugned notices could not be issued and secondly; that the sale agreement, dated 26‑9‑1995 was already available on the departmental record and the assessments of Income/Tax Wealth Tax were made consciously, taking into consideration all the materials available on record and re‑opening of the case either under S.65 of the Ordinance or section 17 of the Act amounts to change of opinion, which is not permissible under the law. At the time of arguments, the learned counsel for the petitioner in support of the first objection referred to subsection (2) of section 64 of the Ordinance while in support of the second objection, he placed reliance on PLD 1990 SC Page 399.

5. Before going into the merits of the objections of the petitioner, it would be appropriate here to dispose of a preliminary objection raised by respondents Nos.3 and

4. This objection is that as adequate remedies under the Ordinance and the Act are available to the petitioner and before exhausting the same, the present writ petition is not maintainable. In support of this objection, the learned counsel‑for the respondents placed reliance on 1993 SCMR 1108. However, this argument is without force. It is correct that if adequate remedies would be available to the petitioner either under the Ordinance or under the Act, the High Court, in its discretionary powers, under Article 199 of the Constitution would not interfere but if it is proved that the assessments of the petitioners were either time‑barred or were made consciously, taking into account all materials available on the record, then the issuance of the impugned notices would amount to illegality and without waiting for the finalization of the assessment, there would be no bar to the filing of writ petition, availing the discretionary, equitable and efficacious powers of the High Court under Article 199 of the Constitution. In this connection, reference could be made to, (i) 2001 SCMR 777 and (ii) 2002 PTD 679.

6. Disposing of the preliminary objection of the respondents, we would now revert to the objections of the petitioner. First objection of the petitioner is that by the date the impugned notices were issued, the assessments both on the Income Tax side as well as on the Wealth Tax side had become time‑barred. As already stated, in this connection, the learned counsel for the petitioner had referred to the subsection (2) of S.64 of the Ordinance, but this objection is without force. No doubt, subsection (2) of section 64 of the Ordinance prescribes a limitation or two years for finalization of the Income Tax Assessment from the end of the financial year, however, this limitation is for the assessments under section 59‑A, S.62 and S.63 of the Ordinance and for the assessment under section 65, this section itself under subsection (3) has prescribed a period of limitation, which is five years from the end of the assessment year in which the income was assessable. On the Wealth Tax side too, the period of limitation for the finalization of such assessment is five years, which is contained in section. 17 of the Act. Counting the period of limitation from the end of the assessment year 1996‑97 i.e. 1-7‑1997, the impugned notices, dated 18‑9‑2001 were issued well within time. The first objection of the petitioner is, therefore rejected.

7. As far as the second objection of the petitioner is concerned, .it is also without force. The land was purchased by an agreement, dated 26‑9‑1995, falling within the assessment years 1996‑

97. Perusal of the sale agreement shows that the land was purchased by the petitioner in his own name and not in the name of AOP. Respondents Nos.3 and 4 in their comments have denied the filing of the sale agreement either with any return or with the explanation offered by the petitioner. The stand taken by the respondents Nos.3 and 4 stands to reason. Admittedly, the petitioner has neither filed any Income Tax Return nor any Wealth Tax Return in his individual capacity and the question of filing of the sale agreement did not arise at all. With the explanation, the petitioner has also not filed any such agreement. The sale agreement amounts to "definite information" within the meaning of explanation to sub section (2) of section 65 of the Ordinance and non‑filing of the Return either on the Income Tax side or on the Wealth Tax side in his individual capacity amounts to concealment of income, falling within the purview of section 65(1)(a) of the Ordinance and section 17(1)(a) of the Act. Respondent No.4, therefore, has rightly issued the impugned notices and his objection is also rejected.

5. Accordingly, this writ petition is without force and is hereby dismissed with costs. M.B.A./880/P Petition dismissed.