' Sardar Abdul Hameed Khan, J.--The above titled appeal has been filed against the judgment of the Income Tax Appellate Tribunal dated 31.1.2000.
2. Concisely, the facts building up the background of the instant appeal are that the appellants are legal heirs of Haji Fazal Karim, who was owner of shopping market situated at Jari Kass Road, Sector F-1, Mirpur. After his death, his property stood divided in his legal heirs according to Quranic shares. The legal heirs of the deceased, tax payer were served various notices for submission of tax returns. They, lastly appeared through counsel and filed different documents to establish that the property has been divided, amongst the legal heirs of Haji Fazal Karim, therefore, the assessment be made in accordance with their respective shares in the divided inheritage/ property. The Income Tax Officer, Survey and Registration, issued demand notice and challan to the tax payers.
The demand notice was appealed before the Appellate Additional Commissioner of Income Tax, who after hearing the tax payers as well as the concerned officials, vide order 18.05.1999 dismissed the appeal. This order was challenged by way of appeal before the leaned Income Tax Appellate Tribunal, AJ&K Council, Muzaffarabad. The learned Income Tax Appellate Tribunal, vide its judgment dated 31.1.2000 also rejected the appeal, observing therein that no deed in writing is available on record to the effect that the property has been divided amongst the legal heirs, hence the above titled Income Tax appeal before this Court.
3. The learned counsel for the parties have addressed the Court at length to assert their respective claims.
4. We have heard the learned counsel for the parties and gone through the record of the case as well as the relevant provisions of law, governing the matter in hand, with due care.
5. In order to appreciate the present controversy in its true perspective, we would like to reproduce Section 21 of the Income Tax Ordinance, 1979, which reads as under: "21. Liability in the case of co-owners.--Where any property to which Section 19 applies is, owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not, in respect of such property, be assessed as an association persons, but the share of each such person in the income from the property shall be included in his total income."
6. The controversy in hand, also got attention of Lahore High Court in Nizam-ud-Din Amir-ud-Din's case, [ITR 1943 Vol. X page 4431, wherein, it was observed as under:- "The assesses who were the co-heirs of a Muhammadan inherited after his death under Muhammadan law specific shares of the property left by him. The assesses did not partition the property and the rent funds stood in their joint names. They had jointly employed a munshi to manage the property and collect the rents and the income after deducting the cost of collection and other expenses was distributed in accordance with their respective shares. In the assessment year 1937-38 Income Tax authorities assessed the assesses as an association of individuals, Held, on a reference, that the assesses did not form an association of individuals and they should be separately assessed on their individual shares,"
7. Even under the Hindu Family governed by Dayabhaga School, the property of a deceased Hindu, when distributed in his descendants, is liable to be assessed in accordance with their respective shares, The Calcutta High Court, in &ma Ranjan Saruadhihary's case" (ITR 1963, Vol, WIZ), Page 927, pleased to hold as under:- "(I) that as the widow and the son, being governed by the Dayabhaga school of Hindu law, had defined shares in the properties, they could not be assessed, in the status either of an association of persons or of a Hindu undivided family. The tax had to be assessed separately on the individuals on the basis of their respective shares of the income from the property."
8. The Supreme Court of India, in case titled Commissioner of Wealth Tax, West Bangal v Gauri Shanhar Bhar, [ITE 1972 Vol. 84 Page 6991, pleased to observe as follows:- "P, a Hindu governed by the Dayabhaga school of Hindu law, died leaving certain properties. His family consisted of six members, his mother, his widow, three sons and a daughter. It was conceded before the Supreme Court that the property left by P was his individual property and it devolved on his heirs in severally; ' Held, that each heir-took a definite share in the property and was liable to pay wealth-tax as individual on the share that devolves on him. The heirs did not form a Hindu undivided family in respect of such property."
9. So far as the observation of the Courts below that definite division of shares has not been submitted before the authorities is concerned, the controversy has already been set at naught by the Lahore High Court, Multan bench in case titled 'Ahmed Hussain v. Haqnawaz etc. [NLR 1989 Civil 6681, wherein, it has been held as under:- "Inheritance under Muhammadan Law opens immediately on date of death of ancestor. Sanction of mutation of inheritance rights is only an executive step to give effect to law of inheritance. It is wrong to contend that heir becomes owner in ancestor's estate after sanction of mutation."
10. The controversy in hand has also-been resolved by a division bench of this Court in case titled 'Mst. Fazal Bi and (6) others v. Commissioner of Income Tax, Government of AJ&K Council, Muzaffarabad and (6) others, [1997 P.C.T.L.R 5191 AJ&K. In Para 8 of the report, it was held as under:- - "8. The provisions of the repealed Act as well as of new law are identical. According to contents of Section 21, share of each partner is to be computed apparently and then it is to be added in other income of assesses if any. No other provision of the Income Tax Law has been cited by the counsel for the respondents to show that income Tax Authorities had the powers to make the assessment as A.O.P of Persons whose shares are well defined. In the case of property, the shares are to be determined by reference to the title deed. In the present case, the sale-deed, dated 22.06.1974 is the title deed, which indicates that share of all the vendees will be equal. Since there is no evidence to support the finding of the Tribunal, it is held that its finding is not warranted by law."
11. After having considered the above quoted precedent case law, we find no reason to agree with the observations returned by the Income Tax authorities, and the Courts below and we hold that the property of a deceased Muslim devolves on his heirs, immediately after his death under the Muhammadan Law and attestation of mutation, thereof, is just a legal formality and the assessm ent for the purpose of Income Tax shall also be made according to their respective shares.
12. It is also on record that a succession Certificate, ascertaining the shares of the heirs of Haji Fazal Karim, deceased was presented before the Tribunal but the learned Tribunal has not considered this document of crucial importance. It seems that the impugned judgments have been passed with closed eyes and without application of judicial mind, which cannot be allowed to sustain in any manner.
13. The nub of the above discussion is that the instant appeal is accepted, impugned judgments of the ITAT dated 31.01.2000 as well as that of the AAC dated 18.5.1999 are hereby set aside and the case is remanded back to the relevant authorities with the direction that the assessment shall be made in accordance with the respective shares of the appellants/heirs of the deceased.
14. The file shall be consigned to record after, announcement of the judgment and due completion.