2025 PLP 653 (PTD)

SHAMS MEHMOOD MIRZA, J.

This writ petition seeks to challenge notices dated 15.05.2024, 17.05.2024 and 20.05.2024 related to tax year 2017-2018.

2. The precise allegation of the petitioner relates to the simultaneous issuance of the impugned notices under section 111 and section 122 of the Income Tax Ordinance, 2001 (the Ordinance). It is stated that the proceedings under section 111 of the Ordinance for making a determination regarding "definite information" is required to take place prior to the initiation of the proceedings under section 122(5) of the Ordinance. Reliance in this regard is placed on the case of Commissioner Inland Revenue v. Messrs Millat Tractors Limited 2024 SCMR 700.

3. The learned counsel appearing on behalf of the respondents submits that the notices impugned in this writ petition are in compliance of the aforementioned judgment of the Supreme Court.

4. Except for the notices issued to petitioner No.1 for tax year 2018 [notice under section 122(9) dated 17.05.2024 and notice under section 111 dated 20.05.2024], all the notices were issued on the same date.

5. The following observations of the Supreme Court in the case of Millat Tractors relates to the controversy involved in this case.

11. Therefore, to answer the first question, and as applicable to the matters at hand, before an assessment can be amended under Section 122 of the basis of Section 111, the proceedings under Section 111(1) are to be initiated, the taxpayer is to be confronted with the information and the grounds applicable under Section 111(1) through a separate notice under the said provision, and then the proceedings are to be culminated through an appropriate order: in the shape of an opinion of the Commissioner. This then becomes definite information for the purposes of section 122(5), provided the grounds mentioned in Section 122(5) are applicable. The taxpayer is then to be confronted with these grounds through a notice under Section 122(9) and only then can an assessment be amended under Section

122. This view has also been recently taken by this Court in Bashir Ahmad wherein it has also been held that a notice under Section 111 can be simultaneously issued with a notice under Section 122(9), however, proceedings under Section 111 have to be finalized first in terms of an opinion of the Commissioner so as to constitute definite information, as is required under Section 122(5) of the Ordinance.

12. We, however underline and clarify that even where a notice under Section 111 is issued simultaneously with a notice to amend an assessment under Section 122(9) of the Ordinance, no proceedings can be undertaken under the latter until the proceedings under Section 111 are finalized and result in an opinion against the taxpayer. This is because, even if some basis for action under Section 111 is mentioned in a notice under Section 122(9), it cannot constitute definite information for the purposes of Section 122(5). The proceedings under the notice issued under Section 122(9) can only be formally initiated when the requirement of definite information is satisfied under Section 122(5) after finalization of the proceedings under Section 111 through an opinion of the Commissioner. Therefore, where no opinion is formed against the taxpayer under Section 111, the proceedings under both provisions i.e., Sections 111 and 122 would lapse, and the notice under Section 122(9) would be of no legal effect. Where, however, there is an opinion formed against the taxpayer as definite information for the purposes of Section 122(5), the proceedings on the: notice issued under Section 122(9) can formally proceed and shall be deemed to have commenced. (Emphasis added)

6. The aforementioned observations clearly spell out the position of law that notices under section 111 and section 122 of the Ordinance can simultaneously be issued but adjudication under section 111 of the Ordinance must take place in the first instance for forming of an opinion that would constitute "definite information" which shall form basis for initiation of proceeding under Section 122(5) of the Ordinance.

7. Learned counsel for the respondents undertakes that the law laid down by the Supreme Court in the case of Millat Tractors shall be complied with in letter and spirit.

8. In this view of the matter, this Court is not inclined to interfere in the notices impugned in this writ petition for the reason that as per the undertaking given by the respondent counsel the proceedings under section 111 of the Ordinance shall be taken up and finalized before initiation of proceedings under section 122 of the Ordinance. This writ petition is accordingly dismissed. MQ/F-9/L Petition dismissed.