ORDER SHEET
IN THE HIGH COURT OF SINDH, KARACHI
W.T.A. NO.75 of 2007.
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ORDER WITH SIGNATURE OF JUDGE
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For Regular hearing.
20.03.2009.
Jawed Farooqui advocate for the applicant.
Mr. Abdul Rahim Lakhani advocate for the respondent.
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These Wealth Tax Appeals has been filed against the order of the learned Income Tax Appellate Tribunal dated 25.08.2006, in WTA No.03/KB/2006 to WTA No.07/KB/2006, wherein the learned Tribunal has upheld the order of the CIT (Appeals) and had rectified the original order, dismissing the appeals and cancelled the impugned orders, passed by the Wealth Tax Officer. On 08.04.2008 this Court had admitted these appeals to consider the following questions:-
1) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in entering the rectification application of the Taxpayer dated 06.04.2006 u/s 35 of the Wealth Tax Act, 1963 against the original appellate order No.23 to 27 in the face of the fact that no mistake was apparent from record and the ground taken in rectification was not taken in grounds of appeals at the time of original hearing.”
2) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in law by accepting the Taxpayers plea of rectification which was not agitated/contested in the original grounds of appeal and at the time of original proceedings and hearing of the case.”
The brief facts of the case are that the Wealth Tax Officer has passed the orders under section 16(3)/23 of the Wealth Tax Act, 1963 and had levied the various demands on the respondents by valuing his properties at Landhi and Mardan.
Being aggrieved by these orders the present respondent had filed Appeals before the CIT (Appeals), who vide her order No.23 to 27 dated 14.02.2006, had after considering the written synopsis of arguments filed by the respondent, dismissed all the appeals. The present respondent then filed rectification applications, a copy of which have not been provided to us but apparently on the basis of these rectification applications the CIT (Appeals) was satisfied that she had not adjudicated on the particular ground that the notice issued under section 17 was vague, and therefore, had rectified her orders and cancelled the impugned orders of the Wealth Tax Officer. Against this the appellant filed appeals before the Income Tax Appellate Tribunal, which were dismissed by the impugned order. Hence, these appeals.
We have heard Mr. Jawed Farooqui the learned counsel for the appellants and Mr. Abdul Rahim Lakhani learned counsel for the respondent.
The main contention of the learned counsel for the appellant was that no specific ground was raised before the CIT (Appeals), however, when a rectification application was filed before her by the respondent without even mentioning as to on which ground she had failed to go her finding, she had accepted the contention of the respondent and rectified her order. He submitted that this did not tantamount to rectification but was in the nature of her review or her sitting in appeal against her own order and was against the provisions of section 156 of the Income Tax Ordinance, 2007.
In this connection he relied on the Judgments of the Hon’ble Supreme Court of Pakistan in the case of Commissioner of Income Tax Vs. Mr. Abdul Ghani reported in SBLR 2007 S.C. 61.
The learned counsel for the respondent has vehemently apposed the arguments of the learned counsel and submitted that he had taken ground No.2 in his memo of appeal in which the order was challenged for being void and illegal and of no legal effect and on this ground he has sought the rectification because in the original order the CIT (Appeals) had not considered that the notice issued under section 17, which was basis of the assessment under section 16(3) of the Wealth Tax Act was vague and illegal in accordance with the various judgment of the Court cited by him before the CIT (Appeals) and the CIT (Appeals) had rightly rectified the order.
We requested him to provide the copy of the memo of appeal and the written arguments, which were made before the CIT (Appeals) and the learned counsel has provided us both these documents. He also strongly contended that even if this ground was not taken in the original ground of appeal, it was still a legal ground, which went to the very root of the case and could have been raised by him in this stage.
In this connection he relied on the judgment of the Lahore High Court in the case of Commissioner of Income Tax, Lahore, Vs. Government Jallo Rosin and Turpentine Factory, Lahore reported in 1976 34 Tax 71 (Lah). and also the judgment of the Hon’ble Supreme Court of Pakistan in the case of Commissioner of Income Tax Peshawar Vs. Gul Cooking Oil and Vegetable Ghee (Pvt) Ltd.
As far as the power of rectification is concerned he relied on the following judgments:
1). KHALID ADAMJEE VS. COMMISSIONER OF INCOME TAX (WEST), KARACHI reported in 1983 48 TAX 56 (H.C. Karachi).
2) Commissioner of Income Tax Vs. M/s. Shadman Cotton Mills Ltd reported in 2008, SCMR, 204.
3). COMMISSIONER OF INCOME TAX VS. ABDUL MAJEED reported in 2000 81 Tax 317 (H.C. Karachi).
We have examined the case in the light of the arguments of the learned counsel and have carefully perused the records of the case including the judgments relied on by the learned counsel.
From a perusal of the memo of appeal filed by the learned counsel we see that ground No.2 taken by him is the assessment order of the learned Assistant Commissioner of Wealth Tax is illegal, ultra vires, void and without any justification. It is prayed that the assessment order be cancelled.
We have to understand as to what this ground meant. We examined the peace of arguments filed by the Gangat & Company the then A.R of the applicant and we have seen that while explaining ground No.1 to 4 and making his arguments on this ground and he has nowhere mentioned that the notice issued under section 17 was vague and therefore, any order passed on the basis of this notice could not be sustained.
On such examination we are of the considered opinion that the ground that notice under section 17 was vague was neither raised in the memo of appeal nor argued before the CIT (Appeals) and therefore, both those basis on which he could have rectified her earlier order and therefore, her rectified order is not in the nature of the rectification order but tantamount to review of her order which she is not permitted to under the provisions of the Income Tax ordinance 1979.
In view of the above opinion the orders of rectification passed by the CIT (Appeals) and the Income Tax Appellate Tribunal upholding the order of the rectification cannot be sustained. We, therefore, answer the questions admitted for hearing in affirmative, which means that such a ground cannot be deemed to be a mistake apparent from record as specified under section 35 of the Wealth Tax Act. However, we have noted that instead of filing an appeal against the original order of the CIT (Appeals), which they were permitted under law of rule, the respondent had filed the rectification application. Once the rectification application has succeeded they did not lead any further remedy as they have already obtained the relief and now if they are asked to file an appeal before the appellate Tribunal the same will be barred by the period of limitation and we are not willing to punish the respondents as due to the illegal order of the CIT (Appeals), we will, therefore, direct the Tribunal to consider any appeal which they file within 30 of this order to be within time and hear and dispose it off on merits in accordance with the Tribunal’s rules.
These Wealth Tax Appeal are disposed off in the above manner.
J U D G E
Sajid