2015 PLP (Trib (PTD)

MUHAMMAD PERVEZ ALAM, ACCOUNTANT MEMBER.

The department through this appeal has assailed the order of learned CIR(A) dated 20-3-2013 whereby appeal of taxpayer/respondent for tax year 2007 was accepted.

2. Briefly stated the facts of the case as per record are that taxpayer/respondent is an AOP, derives income from imports and supply of chemicals, filed return for tax year 2007 on 29-9-2007 declaring total income at Rs.5,002,430 with a claim of refund at Rs.1,890,

853. The return filed by the taxpayer was accepted as deemed assessment order in terms of section 120 of the Income Tax Ordinance. Later on, while perusing the return it transpired that taxpayer has declared his closing stock as on 30-6-2006 at Rs.1,366,193 while in tax year 2007 shown the opening stock at Rs.5,802,302, hence income of Rs.4,436,109 was allegedly concealed in view of the taxation officer and was liable to be added back as income from other sources under section 111 of the Ordinance. Further, taxpayer had claimed adjustment of Rs.3,109,941 (tax deducted under section 148 + Rs.9397 deducted under section 153(1)), which was final tax and was declared so by the taxpayer in his return and that the said adjustment was not allowable under the provisions of section 168(3) of the Ordinance. Accordingly, on both these accounts the return filed by the taxpayer was found erroneous in so far as prejudicial to the interest of revenue. Hence action under section 122(5A) read with section 122(9) of the Ordinance was invoked and the taxpayer was provided opportunities to explain his position through separate notices. In response to which taxpayer filed written reply stating therein that in terms of subsection (2) of section 122 of the Ordinance, amendment in the case could be made till 20-9-2012. This plea of taxpayer was rejected for the reason that subsection (2) of section 122 of the Ordinance was amended through Finance Act, 2009 and the case could not be amended after 29-9-2012. Taxation officer issued another letter to the taxpayer. Accordingly, taxation officer initiated proceedings under section 122(5A) and income of taxpayer was computed as under:- Total income declared Rs.50,02,432 Income from other sources under section 111(1)(d). Rs.44,36,109 Total income. Rs.94,38,541 Tax payable. Rs.31,83,489 FTR Income: Import as declared. Rs.56,75,442 Tax deducted under section 148(1) @ 6%. Rs.31,00,544 Supply as declared Rs.268,490 Tax deducted under section 153(1) @3.5% Rs.9,397 Total tax under all heads. Rs.62,93,430 Feeling aggrieved by the above treatment, taxpayer/respondent went in appeal and the learned CIR(A) accepted the appeal and declared the amended assessment order dated 1-7-2013 as barred by time being void ab initio. Now the department has filed the present appeal before this Tribunal on the following grounds:-- That learned CIR(A) was not justified to declared the amended assessment order as barred by time in view of subsection (5B) of section 122 of the Ordinance and the judgment of Honorable Supreme Court of Pakistan reported as 1963 PTD 33 (SC).

3. We have heard arguments of the parties and have perused the record and are of the view that section 122(5A) was inserted by the Finance Act, 2009 and being substantive in nature is applicable to 2010 and onward and not to tax year 2007. Our this point of view is further corroborated by the judgment of the Tribunal reported as 2013 PTD (Trib.) 1169, which subscribes as under:-- "Statutes are presumed to be only prospective in their operation, according to the authorities on the question, rather than retrospective or retroactive, unless the contrary clearly appears, or is very clearly, plainly and unequivocally expressed or necessarily implied. Under the presumption that a statue is intended to apply alike and equally to all persons unless the contrary clearly appears, a statute cannot be retroactive as to some persons and prospective as to others unless the Legislature has indicated a manifest intention that it should be so" Besides, before the insertion of section 122(5) section 122(2) of the Ordinance was applicable into the year under review i.e. tax year 2007, which for convenience is reproduced as under: "(2) An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the assessment order on the taxpayer." "

4. As is evident from the above that limitation is to be reckoned from the date of filing of return or issuance of assessment order under section 120 of the Ordinance by the Commissioner. In the case in hand, taxpayer has filed return on 29-9-2007 from which, it clearly emanates that deemed assessment order under section 120 was passed on 29-9-2007 and it could be reopened under section 122(4) by 28-9-2012 i.e. within five years from the date of filing of return or issuance of deemed assessment order; whereas the taxation officer has passed the amended order on 17-1-2013, therefore, is hit by limitation and is liable to cancellation. However, tax deducted under sections 148(1) and 153(1) of the Ordinance is final liability under section 169(2)(e) of the Ordinance, which for convenience is reproduced as under: "

169. Tax collected or deducted as final tax.

(1) . (2)(e) there shall be no refund of the tax collected or deducted unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance." From the above it is crystal clear that no credit of the said deduction should be allowed if in future assessee/taxpayer claims any refund with respect of the said deduction as it falls under the Presumptive Tax Regime. With these observations, the departmental appeal fails and is hereby rejected. CMA/50/Tax(Trib.) Appeal rejected.