2026 PLP (Trib (PTD)

FAKHAR-UL-ZAMAN AKHTAR, MEMBER.

This appeal has been filed by the appellant/taxpayer against the impugned order dated 28-6-2024 passed by the Additional Commissioner-IR, Zone-II, RTO-I, Karachi, on the following grounds:

2. That the learned Respondent is illegal, ultra vires, void and without any justification.

3. That the learned Respondent had, without considering the various documents filed by the AR of the taxpayer went on to erroneously hold that the taxpayer had failed to discharge the liability in terms of section 6(3) of the Assets Declaration Act, 2019 and the declaration made thereunder were declared to be void.

4. That these findings were premised on the fact that the taxpayer was unable to furnish the computerized payment receipt of the tax applicable relating to the amnesty for the foreign assets of the taxpayer.

5. That in doing so the respondent failed to appreciate that as per section 9 of the Assets Declaration Act, 2019; the State Bank of Pakistan was required to issue instructions regarding the payment of tax in relation to foreign properties which it did and the copy of the same has been enclosed as Annexure "A" to the appeal.

6. That rules issued by the State Bank of Pakistan were vide Notification No. FD/2566/2038/2019 wherein paragraphs 4 and 5 were relevant to the payment of tax on the foreign assets held outside Pakistan.

7. That it is submitted that the appellant followed all the instructions as provided in the aforementioned paragraphs and paid the tax as due on its foreign assets.

8. That it is pertinent to mention here that the payment of tax under the Asset Declaration Act, 2019 with respect to the foreign assets was done in an unusual way and therefore whether the State Bank of Pakistan is able to generate a CPR with respect to such payment of tax is out of the hands of the appellant.

9. That the appellant provided all the proofs in her possession to satisfy the respondent that it had done everything in her power to make the payment of tax and the amount was even subtracted from the bank account that the taxpayer used in the payment of the tax applicable to the amnesty. Evidence substantiating the payment of tax relating to foreign assets in enclosed herewith.

10. That notwithstanding the above, the respondent still insisted on being provided a CPR to evidence the payment of tax relating to the foreign assets.

11. That in view of such insistence the appellant through its AR wrote an email to the FBR in which State Bank of Pakistan was also CC wherein request was made to be provided the CPR as requested by the respondent.

12. However the FBR never reverted on such request which led to the respondent to unlawfully conclude that the declaration made by the appellant were void under the Assets Declaration Act, 2019.

13. That in addition to the above the respondent also failed to appreciate that the appellant is a non-resident tax payer and as such is not required to account for any income or asset that she has generated outside Pakistan.

14. That in addition to the above the impugned order is contrary to section 120B as it disentitles proceedings to be undertaken against any asset which is declared in the Assets Declaration Act, 2019.

15. That it is pertinent to mention here that non generation of a CPR does not entitle the tax payer from the protection offered by the amnesty 2019.

16. All that is required is that the payment of tax is made in accordance with the provisions of the statute.

17. That as can be evidenced by the documents shared by the appellant tax was duly paid by the taxpayer in accordance with the instructions issued by the State Bank of Pakistan.

18. That mere non generation of a CPR is a procedural lapse and that to at the hands of either State Bank of Pakistan or FBR. It is settled law that such procedural lapses which do not cause any loss to the exchequer cannot result in the creation of a tax PRAYERS: It is most respectfully submitted on behalf of the appellant that on the basis of the abovementioned grounds this Hon'ble Tribunal is pleaded to:

1. Set aside the impugned order dated: 27 June, 2024 and cancel the demand being raised as a result of the said impugned order;

2. Declare that the appellant has done everything in her power to follow the procedure as required by law in relation to the payment of tax permitting the amnesty 2019;

3. Declare that non generation of a CPR is merely a procedural lapse that cannot result in the creation of a tax liability;

4. Declare that the appellant is entitled to the benefit of the amnesty;

5. Any other relief that this Hon ble Forum may deem just and fit in the circumstances.

2. Brief facts of the case are that the taxpayer is an individual. Return of Income under section 114 of Income Tax Ordinance, 2001 e-filed on 30-06-2019 declaring Net assets current year amounting to Rs.102,093,083/-.The return so filed was treated as an assessment order deemed to have been issued in terms of Section 120(1) of the Income Tax Ordinance, 2001. Later on, the said deemed assessment order was examined and it was observed that the same was erroneous in so far as prejudicial to the interest of revenue warranting amendment under subsection (5A) of section 122 of the Ordinance. Accordingly, a show-cause notice under section 122(9) read with Section 122(5A) of the Income Tax Ordinance, 2001 accordingly which was responded but could not satisfy the Additional Commissioner Inland Revenue. Thus deemed assessment order was amended under section 122(5A) of the Income Tax Ordinance, 2001.

3. On the due date of hearing, Mr. Faiz Ahmed, Advocate, appeared on behalf of the appellant whereas Mr. Akhtar Khan, learned D.R. represented the department and case was discussed with them in detail in the light of arguments forwarded by both the rival parties, the order of Additional Commissioner-IR, Zone-II, RTO-I, Karachi and record available to the court.

4. During the course of hearing, learned A.R. besides reiterating the grounds of appeal submitted that the respondent/taxpayer had, without considering the various documents filed by the taxpayer went on to erroneously hold that the taxpayer had failed to discharge the liability in terms of section 6(3) of the Assets Declaration Act, 2019 and the declaration made thereunder were declared to be void. That these finding were premised on the fact that the taxpayer was unable to furnish the computerized payment receipt of the tax applicable relating to the amnesty for the for the foreign assets of the taxpayer. That in doing so the respondent failed to appreciate that as per section 9 of the Assets Declaration Act, 2019; the State Bank of Pakistan was required to issue instructions regarding the payment of tax in relation to foreign properties which it did. The learned counsel stated that rules issued by the State Bank of Pakistan were vide Notification No. FD/2566/2038/2019 wherein paragraphs 4 and 5 were relevant to the payment of tax on the foreign assets held outside Pakistan and all the instructions as provided in the aforementioned paragraphs and paid the tax as due on its foreign assets. The learned counsel further stated that it is pertinent to mention here that the payment of tax under the Asset Declaration Act, 2019 with respect to the foreign assets was done in an unusual way and therefore whether the State Bank of Pakistan is able to generate a CPR with respect to such payment of tax is out of the hands of the appellant. The learned counsel submitted that the appellant provided all the proofs in her possession to satisfy the respondent that it had done everything in her power to make the payment of tax and the amount was even subtracted from the bank account that the taxpayer used in the payment of the tax applicable to the amnesty. Evidence substantiating the payment of tax relating to foreign assets in enclosed herewith. Further stated that the respondent still insisted on being provided a CPR to evidence the payment of tax relating to the foreign assets. In view of such insistence the appellant through its AR wrote an email to the FBR in which State Bank of Pakistan was also CC wherein request was made to be provided the CPR as requested by the respondent. However the FBR never reverted on such request which led to the respondent to unlawfully conclude that the declaration made by the appellant were void under the Assets Declaration Act, 2019. In addition to above the respondent also failed to appreciate that the appellant is a non-resident tax payer and as such is not required to account for any income or asset that she has as generated outside Pakistan. Further stated that the impugned order is contrary to section 120B as it disentitles proceedings to be undertaken against any asset which is declared in the Assets Declaration Act, 2019. The learned counsel argued that non-generation of a CPR does not entitle the taxpayer from the protection offered by the amnesty 2019 and stated that is required is that the payment of tax is made in accordance with the provisions of the statute. That as can be evidenced by the documents shared by the appellant tax was duly paid by the taxpayer in accordance with the instructions issued by the State Bank of Pakistan. He further argued that non-generation of a CPR is a procedural lapse and that to at the hands of either State Bank of Pakistan or FBR. It is settled law that such procedural lapses which do not cause any loss to the exchequer cannot result in the creation of a tax liability. He prayed that the appellant has done everything in her power to follow the procedure as required by law in relation to the payment of tax pertaining to the amnesty 2019, therefore, non-generation of a CPR is merely a procedural lapse that cannot result in the creation of a tax liability.

5. On the other hand, the learned D.R. has strongly opposed the contentions submitted by the learned A.R. of the appellant/taxpayer and supported the order of the AdCIR. He submitted that the impugned order passed by the AdCIR is legal, lawful and in accordance with law. He prayed that the impugned order passed by the AdCIR may kindly be maintained.

6. We have considered the submissions of both sides and perused relevant record of case. This case relates to the non-payment of tax on the amount calculated in the amnesty on 30th June 2019. In this connection, the Additional Commissioner IR initiated proceedings and the appellant was asked to provide documentary evidence i.e. CPR to justify the acquisition of reconciling revised wealth statement filed for tax year 2018 at Rs.89,430,573/-, but appellant allegedly failed to provide supporting document hence the same was added back to the total income of taxpayer as investment from undisclosed sources of income from other sources under section 111(1)(b) of Income Tax Ordinance, 2001. The AdCIR held that the taxpayer has violated the section 6 of Asset Declaration Ordinance, 2019 which provides that if a person fails to pay tax and default surcharge according to this section, the declaration made shall be void and shall be deemed to have never been made under Asset Declaration Ordinance, 2019.

7. Before us the appellant has submitted that CPR was not generated by the concerned Department i.e. State Bank hence on this procedural lapse the appellant cannot be punished because the appellant is non-resident and living in Saudi Arabia since last many decades. The appellant's counsel was asked to submit any proof of payment of tax on the amount declared vide amnesty scheme introduced through Asset Declaration Ordinance, 2019, the taxpayer in response furnished the copy of money transfer draft of Samba Bank showing transfer of USD 12000 in prescribed account of State Bank of Pakistan and also furnished copy of Income tax payment challan PSID # 33183750 showing USD 12,000 (converted at Rs.1,956,655/-). The learned AR referring to Section 6(2) of Assets Declaration Ordinance, 2019 submitted that the tax in respect of foreign assets or foreign currency held in Pakistan shall be paid in foreign currency according to the procedure prescribed by State Bank of Pakistan in the mode and manner provided in section 9 of the said Ordinance. The learned AR elaborating the mode and manner prescribed in section 9 stated that the deposit of tax in foreign currency was to be made through State Bank of Pakistan which was accordingly done in accordance with detailed procedure under section 9 of Asset Declaration Ordinance, 2019 as is available on the website of State Bank of Pakistan.

8. After considering submission of learned AR and examination of proof of payment made through Samba Bank, we have perused the procedure under section 9 of Assets Declaration Ordinance, 2019, which shows that the deposit of tax was to be made from outside Pakistan in National Bank of Pakistan Account No.5640-5090 with swift code NBPA AUS33 and same is evident in the proof of payment i.e. money transfer by Samba Bank, hence it is established that the appellant on its own part has done the job well in accordance with law and procedure provided by the Government of Pakistan is followed in letter and spirit. Moreover, reading of 5(c) of procedure provides that after verification by NBP Karachi regarding receipt of money in the said account, the concerned officer of FBR shall input amount so received in the designated field and in case of short payment, the system will generate sms/email for the taxpayer regarding the short payment, which can be deposited in cash with the designated NBP branches in major cities. It is agitated by the learned AR that officer constantly insisted for provision of CPR despite the fact that appellant has already deposited the tax as evident from payment proof. The appellant's counsel in this regard submitted that despite the fact that it was procedural lapse on the part of concerned department itself and the taxpayer had fulfilled its liability, and no sms/email of short payment or non-payment was sent by the concerned department as envisaged in section 5(c) even then the appellant's counsel wrote an email to State bank and FBR requesting issuance of CPR either in PDF format evidencing the deposit of such tax or give any other appropriate piece of evidence that can be shown to said officer of FBR that all terms relating to the said amnesty were duly complied with.

9. To conclude the proceedings, we hold that the taxpayer has done her job well in accordance with law, so now onus is upon the department to reject the version of taxpayer if with corroborative evidence. We are fortified from a judgment of Hon'ble Lahore High Court reported as 1973 PLD 870 and (1973) 28 Tax 181 wherein it is held that if a person is required by law to do something which becomes impossible for him to do not on account of his own negligence or fault but on account of something which was unavoidable and in any case not subject to his control, he cannot be said to have failed to perform that which the law or an order passed under the law required him to do so.

10. In view of above discussion, appellant has proved her case with documentary evidence. The departmental action seems to be violative of relevant law and rules prescribed by the Government of Pakistan. Appeal is allowed and the impugned order is vacated. However, the department is at liberty to initiate proceedings in accordance with law if it has sufficient material against the taxpayer.

11. Resultantly, the appeal filed by taxpayer is disposed off in above terms. MQ/18/Tax (Trib.) Appeal allowed.