MUHAMMAD AFZAL LONE, J.-l. The petitioner who is an Advocate by profession, filed Income Tax Returns for two assessm ent years 1980-81, 1981-82, 1982-83 and 1983- 84. His declared version was accepted and the assessm ent made at Rs. 12,300/-, Rs. 12,400/-, Rs. 12,500/-and Rs. 18,100/-, respectively. On the basis of a complaint filed against the petitioner by one of his junior colleagues, the Income tax Officer chose to reopen the case. The allegation against him was that he concealed his income and acquired three immovable properties, particularized below in his own name as well as in the name of his wife and son, which were never disclosed to the Department:
(1) Property No. S-XIX-5-S/12, Pakki-Thatti, Samanabad, Lahore.
(2) Property No. S-19.5.S.2A, Pakki Thatti, Lahore.
(3) Property No. S-16-899-N, Poonch Road, Lahore, purchased, on 29th September, 1980 for Rs.
5,00,000/-.
The other alleged concealments were that-
(a) He got allotted plot No. 268, P-Block, Model Town Extension Scheme, Lahore, during the assessm ent year 1982-83 and constructed a bungalow at the cost of Rs. 6,00,000/-.
(b) He spent a colossal amount on the marriage of his daughters which took place in the years 1973-74 and 1981. Likewise, he incurred exorbitant expenditure on the marriage of his son, solemnized in 1982.
(c) He ordinary handled 30 cases in a month and charged Rs. 5,000/- to 20,000/- per case.
2. The petitioner refuted the allegations, denied the ownership of immovable properties, contested the re-opening of the cases and produced evidence in support of his stand. The Income Tax Officer by a consolidated order dated 21st June, 1986 re-assessed the petitioner's income for all the four years asunder:-- 1980-81 <0 The income from profession was raised to Rs. " 40,000/-
(ii) Addition on account of unexplained Bank deposit. Rs. 1,000/- Total: Rs. 51,000/- 1981-82
(i) The income from profession reassessed to Rs. 50,000/- () Additions oft account of: (a) Investment in Property No. 899- N, Poonch Road, Lahore. Rs.
5,00,000/-
(b) Unexplained cost of Plot No. 268-B, Model Town Extension Scheme, Lahore. Rs. 55,000/-
(t) Unexplained Bank deposit. Rs. 6,028/- Total: Rs. 6,11,028/- 1982-83
(i) The income from profession reassessed. Rs. 60,000/- Total: Rs. 60,000/- 1983-84
(i) The income from profession reassessed. Rs. 70,000/-
(ii) Additions because of difference cost of construction of House No. 268-P, Model Town Extension Scheme, Lahore. Rs. 28,000/- Total: Rs. 98,000/- {{ TABLE }}
3. Aggrieved by the orders of the Income Tax Officer, the petitioner preferred an appeal before the Commissioner Income Tax (Appeals) who under his order dated 14th February, 1987, granted some relief. The addition of Rs. 11,000/- in the assessed income for the year 1980-81 was deleted. Likewise, the additions of Rs. 55,000/- and Rs. 6,0287- in the estimated income for the year 1981-82 were struck down and further the professional income was reduced by Rs. 5,000/-. Consequently, the assessed income for 1981-82 stood fixed at Rs. 66,028/-. For the year 1982-83, the professional income was brought down from Rs. 60,000/- to Rs. 50,000/-. The assessed professional income for the year 1983-84 as well was reduced by investment in immovable properties, the order of the Assessing Officer was not interfered with.
4. The petitioner then went in second appeal before the Income Tax Appellate Tribunal. The Department also preferred an appeal questioning the grant of relief to the petitioner under the appellate order of the Commissioner. It is on the record that the name of the petitioner's wife was Mst. Mumtaz Begum. In the proceedings before the Income Tax Officer, a controversy arose regarding the name of her father. According to the assessment order Mst. Mumtaz Begum filed a suit against the LDA in respect of Property No. 899-N, Samanabad, Lahore. To establish that the lady who brought the suit was the petitioner's wife, the Income Tax Officer examined the complainant namely Mr. Naveed Ashiq Alvi Advocate under Section 148 of the Income Tax Ordinance, who had acted as a counsel for the plaintiff in the civil suit heard by the Senior Civil Judge, Lahore. As per complainant's version in the civil suit, Mst. Mumtaz Begum was shown to be the daughter of one Muhammad Sharif and further the Senior Civil Judge passed an order in which the petitioner was enlisted amongst her her Rs. In the order of the Income Tax Officer, the petitioner has been accused of changing the identity of his wife. In this behalf the Income Tax Officer referred to a statement attributively made by the petitioner in an inquiry before the L.D.A. The latter, however, denied to have given any such statement. To controvert his contention the Income Tax Officer heavily relied upon the such statement.
To controvert his contention/statement of the petitioner assailed the validity of the orders of the authorities below on a number of grounds including the pleas that neither the Senior Civil Judge passed any such order nor was he confronted with the statement of Mr. Naveed Ashiq Alvi, Advocate. The petitioner's submission prevailed with the Tribunal who by its order date It July, 1987 under challenge in this writ petition maintained:-- "....The learned D.R., however, could not produce the documents which were considered in the assessm ent order to identify Mst. Mumtaz Begum as wife of the appellant. The very fact that:-
(i) there was no order of the learned Civil Judge available on record on the basis of which the officers below have given their findings;
(ii) the appellant was never confronted with the statement of Naveed Ashiq;
(iii) no statement was ever given by the appellant to LDA in connection with the inquiry as alleged on page 7 paragraph 2 of the assessment order.
In short, there is nothing on record to support the findings of the assessing officer! We also realize that the assessee was not provided proper opportunity which he was legally entitled to. In view of the above such an order cannot be sustained in law. We therefore, set aside all the four assessm ents to be completed afresh"
5. I have heard the learned counsel for the parties. Mr. Muhammad Amin Butt, learned counsel for the petitioner has assailed the impugned order only to the extent it gives a direction for completion of the assessm ent afresh. Thus, so far the setting aside of the assessment by the lower Income Tax Authorities, is, concerned, he fully supported the same. His objection to the validity of the de-novo hearing by the Assessing Officer, was that the department mustered entire evidence and on perusal thereof the Tribunal rendered a definite finding that the allegations against the petitioner regarding concealment of income were not established. It was argued that though remand of the case to the Income Tax Officer for assessment afresh, Was within the discretion of the Tribunal yet this discretion had to be exercised in consonance with the judicial principles. The submission was that it was for the Income Tax Officer to have established before the Tribunal that the income escaped assessm ent and he collected entire evidence in this behalf, but failed to prove any concealment on the part of the petitioner. In these circumstances according to Mr. Butt, the Tribunal failed to exercise its discretion in an objective manner and, therefore, the direction as to the recommencement of the assessment, was not rested on any judicial ground. He referred to Maharani Bank Kumari Sahiba Vs. Commissioner of Income Tax, Bihar & Orisa (1955 (XXVIII) I.T.R.
462) to substitute his submission that the remand of the case to the Income Tax Officer for assessm ent afresh was wholly invalid.
6. On behalf of the Department it has been argued that section 135 of the Income Tax Ordinance, 1979 fully empowers the Tribunal to set aside the assessment, if it is not found to be in conformity with law and direct the Income Tax Officer to make assessment afresh. It was emphasised that the remand of the case to the Income Tax Officer was well within the jurisdiction of the Tribunal and such an order cannot be subjected to judicial review.
7. The powers of the Appellate Tribunal are given in section 135 ibid, which in so far as relevant for the purpose of this case is reproduced below:-- "(1) .........................
(2) ...................
(3)
(4) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal-
(a) ought to be reduced or annulled, it shall reduce or annul the assessment accordingly; or
(b) is insufficient, it shall enhance the assessment accordingly, or
(c) ought to be set aside, it shall set aside the assessment and direct the Income Tax Officer to make a fresh assessm ent.
(5) If the Appellate Tribunal is satisfied that an order which is the subject of appeal, ought to be interfered with, it shall cancel or vary the order accordingly and shall issue such consequential directions as the case may require.
(6) ...........
(7) ...........
(8) ...............
(9) ...........
It is to be seen that the power conferred on the Tribunal in hearing an appeal are fairly wide and under sub-section 4(c) as an appellate Authority it can set aside the assessment and give a direction to the assessing Officer to make fresh assessment. But the Appellate Tribunal is a quasi judicial Tribunal. The nature of powers conferred on it and the consequences ensuing from the exercise of that powers, necessarily entail that while hearing the appeal it must be governed by judicial considerations. The expression "if. Satisfied" appearing in the opening clause of sub-section
(4) does not confer an absolute and subjective authority on the Tribunal but according to the long line of decisions interpreting this expression, it does not import any arbitrary or capricious satisfaction but must be construed to mean "reasonable satisfaction" capable of scrutiny in an objective manner.
8. With this analysis of the powers of the Tribunal, it has now to be considered as to whether or not the direction given by it to the Assessing Officer to commence re-assessment proceedings afresh, in conformity with law. It is to be remembered that burden to show, that within the meaning of section 65, the income escaped assessment or was under assessed or assessed at too low a rate lies on the department. Reference in this respect may be made to Commissioner of Income Tax Bombay vs. Gopal Vaijnath Manoher (AIR 1935 Bombay 410). Following this precedent, Beaumont C.J. In Chairman Motilal vs. Commissioner of Income Tax [Central Bombay (AIR Bombay 132)] observed: "...Income cannot be held to have escaped assessment merely on the ipse dixit of the Income Tax Officer. As held by this Court in (1935) 3.I.T.R. 372 it is for the Income Tax Officer to establish to his own satisfaction on the assessm ent, and subsequently before any appellate tribunal, that income has escaped assessm ent it is not for the assessee to prove that the original assessment was right and that no income has escaped assessment...."
It is evident from the impugned order that the Tribunal came to a clear cut conclusion that the Income Tax Officer failed to establish that there was non-disclosure of material facts by the assessee and that his income escaped assessment. The Tribunal found that his order was not anchored on any reliable evidence and thus adjudged illegal. It was, therefore, rightly set aside by the Tribunal. The Tribunal's order gives an impression that in setting aside the orders of the Income Tax Authorities, the omission on the part of the Income Tax Officer to provide proper opportunity to the petitioner to defend himself also weighed with it. But a careful reading of impugned order unequivocally conveys that what really prompted the Tribunal to quash the assessment order was that the allegation of concealment of income was not a tall substantiated against the petitioner.
The mention of the Income Tax Officer's failure to extend reasonable opportunity of hearing to the petitioner, is merely an additional ground supplementing the decision to set aside an untenable assessm ent order. In these circumstances a direction as to fresh assessment amount to allowing the department to muster additional evidence to patch-up Inc unary Ch. Muhammad Sadiq Vs. Income Tax Officer CL. 497 (Mr. Muhammad Afzal Lone, J.} re-assessment proceedings.
9. I have examined the case of Maharani Nanak Kumari cited on behalf of the petitioner. It lends support to his contentions. In that case the assessee carried on manufacturing business and after promulgation of the High Denomination Bank Notes (Demonetization) Ordinance, she exchanged high denomination notes of the value of Rs. 3,97,000/-. This money was not declared by her in the total income return in the relevant assessment year and was called upon by the Income Tax Officer to disclose the source of the amount. Her explanation was that the money belonged to her husband, Maharaja of Dumraon. The Income Tax Officer did not accept this explanation and treated the amount as her undisclosed income. In appeal, the Appellate Assistant Commissioner on the basis of the evidence before him agreed with the assessee, maintained that the currency notes exchanged by her formed part of the surplus collections of the Dumraon Estate which from time to time were withdrawn by the Maharaja from the Bank. The Income Tax department went in further appeal before the Appellate Tribunal which was allowed and the case remanded to the Income Tax Officer, to investigate the assessee's claim that the amount represented the cash balance of her husband. The assessee agitated against the correctness of the remand order in the Patna High Court and opposed the remand on the plea that the matter had already been investigated by the Appellate Assistant Commissioner, who examined the account books of the assessee's husband which confirmed her version and thus further investigation through remand was un-warranted. The D.B. Seized of the case, was influenced by this argument and maintained:- "....The Appellate Tribunal had no justification for making the order of remand to the Income Tax Officer to bring on record further evidence on the same point. It is true that section 33(4) has granted a very wide statutory discretion to the Income-tax Appellate Tribunal in disposing of an appeal but the discretion given under this section to the Income Tax Appellate Tribunal is a judicial discretion which must be exercised in accordance with legal principles, and not in an arbitrary or capricious manner. The principle to be applied in such a case is pointed out by Lord Halsbury in Busannah Sharp vs. Wakofield (1891 A.C 173): "An extensive power is confided to the justices in their capacity as justices to be exercised judicially; and 'discretion' means when it is said that something is to be done according to the rules of reason and justice, not according to private opinion..........
Applying this principle to this case it is manifest that the order of remand made by the Appellate Tribunal is not a legally valid order...."
10. The jurisdiction of the Income Tax Officer to reopen the case was circumscribed by the conditions laid down in section 65. In the absence of those conditions he had no jurisdiction to embark upon re-assessm ent. Before commencing re-assessment proceedings against the petitioner, he was required to have objectively satisfied himself that the facts constituting the foundation of his jurisdiction subsisted and there was material before him to support the existence of such facts. His action was subject to scrutiny by the Appellate Authorities. As already observed, the Tribunal set aside the assessme nt order for lack of such material. It is nobody's case that complete picture of the case was not before the Tribunal and some aspects thereof required elucidation necessitating remand to the Income Tax Officer. The power to remand is discretionary in nature. But such discretion is to be exercised reasonably and fairly indicating the reasons for remand. The impugned order does not satisfy this test. Upon the facts obtaining on the record, there was no valid ground to send back the case to the Income Tax Officer for fresh assessment.
The direction given by the Tribunal in this respect is wholly illegal and most likely shall expose the petitioner to another round of encumber some proceedings and un-necessary harassment. Such a direction is liable to be struck down in exercise of constitutional jurisdiction of this Court.
11. For all these reasons this writ petition is accepted and the impugned order to the extent of ordering the fresh assessm ent by the Income Tax Officer, is declared to have been passed without lawful authority and of no legal effect. The parties are left to bear their own costs.